Part 1 Intraday Master Class

Understanding Options: Basic Terms

Before going into the rules, you must understand the core terms:

a) Call Option

A call option gives the buyer the right, but not the obligation, to buy an asset (like Nifty, Bank Nifty, stocks) at a fixed price.

b) Put Option

A put option gives the buyer the right, but not the obligation, to sell an asset at a fixed price.

c) Strike Price

The price at which the option buyer can buy (call) or sell (put) the underlying asset.

d) Premium

The price paid by the option buyer to the option seller (writer). Premium is non-refundable.

e) Expiry Date

The last date on which the option contract is valid. After expiry, the contract becomes worthless.

f) Lot Size

Each option contract is traded in fixed quantities called “lots.” You cannot buy 1 share in options, only lots.