How Options Work
Example of a Call Option
Suppose a stock is trading at ₹100. You buy a call option with a ₹110 strike price, expiring in 1 month, and pay a ₹5 premium.
If the stock rises to ₹120: Your profit is ₹120 - ₹110 = ₹10. Net gain = ₹10 - ₹5 = ₹5.
If the stock stays at ₹100: The option expires worthless. Your loss = ₹5 (premium).
Example of a Put Option
Suppose the same stock is ₹100, and you buy a put option with a ₹90 strike price for ₹5.
If the stock drops to ₹80: Your profit = ₹90 - ₹80 = ₹10. Net gain = ₹10 - ₹5 = ₹5.
If the stock stays above ₹90: The option expires worthless. Your loss = ₹5.
Example of a Call Option
Suppose a stock is trading at ₹100. You buy a call option with a ₹110 strike price, expiring in 1 month, and pay a ₹5 premium.
If the stock rises to ₹120: Your profit is ₹120 - ₹110 = ₹10. Net gain = ₹10 - ₹5 = ₹5.
If the stock stays at ₹100: The option expires worthless. Your loss = ₹5 (premium).
Example of a Put Option
Suppose the same stock is ₹100, and you buy a put option with a ₹90 strike price for ₹5.
If the stock drops to ₹80: Your profit = ₹90 - ₹80 = ₹10. Net gain = ₹10 - ₹5 = ₹5.
If the stock stays above ₹90: The option expires worthless. Your loss = ₹5.
Hello Everyone! 👋
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Hello Everyone! 👋
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.