Part 4 Learn Institutional Trading

Call Option

A call option gives you the right to buy the underlying asset at the strike price.

Traders buy calls when they expect prices to go up.

Example: You buy a call option on Reliance at ₹2,500. If the stock jumps to ₹2,700, your call becomes profitable.

2. Put Option

A put option gives you the right to sell the underlying asset at the strike price.

Traders buy puts when they expect prices to go down.

Example: You buy a put on TCS at ₹3,600. If the stock falls to ₹3,300, your put gains value.

Both call and put options derive their value from the underlying asset, which is why they are called derivatives.