Part 2 Support and Resistance

Key Terms in Option Trading

Before diving deeper, it’s important to understand some key terms:

Underlying Asset: The financial asset on which the option is based (e.g., Nifty, Bank Nifty, Reliance Industries stock).

Strike Price: The fixed price at which the holder can buy or sell the underlying asset.

Expiry Date: The date when the option contract expires.

Premium: The price paid by the buyer to the seller (writer) of the option.

Lot Size: The minimum quantity of the underlying asset in one option contract.

In-the-Money (ITM): When exercising the option is profitable.

Out-of-the-Money (OTM): When exercising the option is not profitable.

At-the-Money (ATM): When the strike price is equal (or close) to the current market price of the underlying asset.