Part 1 Master Candle Pattern

Introduction to Options Trading

Options trading has become one of the fastest-growing segments of the Indian financial market. Once considered a playground only for institutions and advanced traders, options are now widely accessible to retail investors thanks to online trading platforms, mobile apps, and reduced brokerage costs.

In India, the NSE (National Stock Exchange) is the world’s largest derivatives exchange in terms of contracts traded, with Bank Nifty and Nifty 50 options leading the charge. For retail traders, options present opportunities for hedging, speculation, and income generation, making them versatile instruments.

But options are also complex. Unlike stocks, where you directly own a piece of a company, options are derivative contracts—their value depends on the price of an underlying asset. This makes them both powerful and risky if not understood properly.

What are Options?

An option is a financial contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (strike price) before or on a specific date (expiry).

Call Option → Right to buy an asset at a strike price.

Put Option → Right to sell an asset at a strike price.

Unlike futures contracts, option buyers are not obligated to execute the trade. They can choose to let the option expire worthless if the trade doesn’t go their way.