Part 2 Intraday Trading Masterclass

Key Terminologies in Option Trading

Before diving deeper, it’s important to understand some fundamental terms used in option trading:

Strike Price (Exercise Price): The price at which the holder can buy or sell the underlying asset.

Expiry Date: The date on which the option contract expires.

Premium: The cost of buying an option.

In-the-Money (ITM): When exercising the option would be profitable.

At-the-Money (ATM): When the underlying price equals the strike price.

Out-of-the-Money (OTM): When exercising the option would not be profitable.

For example, if a trader buys a call option with a strike price of ₹200 and the stock trades at ₹250, the call option is in-the-money.