Part 2 Ride The Big Moves

Understanding Call and Put Options

There are two main types of options: Call Options and Put Options.

Call Option:
A call option gives the holder the right to buy the underlying asset at a fixed strike price within a specified time.

Example: If you buy a call option on Reliance at ₹2,500 strike price and the price rises to ₹2,700, you can exercise your right to buy at ₹2,500 and profit from the difference.

Put Option:
A put option gives the holder the right to sell the underlying asset at a fixed strike price within a specified time.

Example: If you buy a put option on Infosys at ₹1,500 strike price and the stock falls to ₹1,300, you can sell at ₹1,500 and gain the difference.

Think of a Call Option as being bullish (expecting price rise) and a Put Option as being bearish (expecting price fall).