Part 8 Trading Master Class

Calls & Puts with Real-Life Examples
Call Option Example

Suppose Reliance stock is trading at ₹2,500.
You buy a Call Option with strike price ₹2,600, paying a premium of ₹50.

If Reliance goes to ₹2,800, your profit = (2800 - 2600 - 50) = ₹150 per share.

If Reliance stays below 2600, you lose only the premium = ₹50.

A call option = bullish bet (you expect prices to rise).

Put Option Example

NIFTY is at 22,000.
You buy a Put Option strike 21,800, premium ₹80.

If NIFTY falls to 21,200 → Profit = (21800 - 21200 - 80) = ₹520 per lot.

If NIFTY rises above 21,800, you lose only ₹80.

A put option = bearish bet (you expect prices to fall).

Why Traders Use Options

Options are powerful because they allow:

Leverage – Control large value with small money (premium).
Example: Buying Reliance stock directly at ₹2,500 may cost ₹2.5 lakh (100 shares). But buying a call option may cost just ₹5,000.

Hedging – Protect portfolio from losses.
Example: If you hold Infosys shares, you can buy a put option to protect against downside.

Speculation – Bet on market direction with limited risk.

Income generation – Selling options (covered calls, cash-secured puts) generates steady income.