Divergence Secrets

What Are Options?

Options are derivative contracts that give the buyer the right (but not the obligation) to buy or sell an underlying asset (like stocks, index, currency, or commodity) at a predetermined price on or before a specific date.

Call Option (CE): Right to buy.

Put Option (PE): Right to sell.

Key Terms in Options

To understand options, you must know these basics:

Strike Price: The pre-decided price at which you can buy/sell the asset.

Premium: The cost you pay to buy the option contract.

Expiry Date: The date when the option contract ends.

Underlying Asset: The stock, index, or commodity linked to the option.

Lot Size: Minimum quantity you can trade in options (e.g., Nifty lot = 50 units).

Call vs Put Options

Call Option Buyer: Expects price to rise (bullish).

Put Option Buyer: Expects price to fall (bearish).

Call Option Seller: Expects price to stay below strike.

Put Option Seller: Expects price to stay above strike.