Options Basics
Learn options trading from scratch — what calls and puts are, how premium works, strike price, expiry, and how to trade on NSE.
- What is the Difference Between Options Buyer and Options Seller? An options buyer pays a premium to gain the right (but not the obligation) to buy or sell an asset, with their maximum loss limite…
- What Does "Right But Not Obligation" Mean in Options? In options trading, having the "right but not the obligation" means the buyer can choose to execute the contract if it's profitabl…
- What is a BANKNIFTY Options Contract? A BANKNIFTY Options Contract gives you the right, but not the obligation, to buy or sell the BANKNIFTY index at a set price by a s…
- What is Options Assignment? Options assignment is when the seller of an options contract is forced to fulfill their obligation to the buyer. This happens when…
- What Happens When an Options Contract Expires? When an options contract expires, it is either settled if it has value (in-the-money) or it becomes worthless if it doesn't (out-o…
- Is Options Trading the Same as Options Buying? Options trading includes both buying and selling. Options buying has capped risk and low capital needs but fights time decay. Sell…
- 5 Things Every Beginner Must Know Before Trading Options in India Options trading in India can offer great opportunities, but it also carries high risks for beginners. Understanding basics like ca…
- What is the Strike Price Interval for BANKNIFTY Options? The strike price interval for BANKNIFTY options is 100 points. This means that available strike prices are in multiples of 100, su…
- What Do the Columns in an Options Chain Mean? The columns in an options chain show key data for call and put options at various strike prices for a specific expiry date. They i…
- When Does NIFTY Weekly Options Expire? NIFTY weekly options expire on the Thursday of every week. If Thursday is a trading holiday, the expiry moves to the previous trad…
- What is the Difference Between OTM and Deep OTM Options? The primary difference between OTM and Deep OTM options is how far the strike price is from the stock's current price. Deep OTM op…
- What is the Break-Even Point in Options? The break-even point in options is the spot price at which your trade neither makes nor loses money at expiry. For a call buyer it…
- 10 Things to Know Before Reading an Options Chain An options chain is a detailed table showing all available options contracts for a security. Understanding what is options trading…
- What is the Binomial Options Pricing Model? The Binomial Options Pricing Model is a method used to figure out the fair price of an options contract. It works by creating a 't…
- How is Black-Scholes Different from the Binomial Model? The Black-Scholes model uses a single mathematical formula to find an option's price, making it fast but rigid and best for Europe…
- How to Trade Using India VIX Levels India VIX measures expected market volatility — low VIX means cheap options, high VIX means expensive ones. Use it to decide wheth…
- Why Can't You Just Use Formulas to Make Money in Options? You cannot use just formulas to make money in options because they are based on perfect-world assumptions that don't hold up in re…
- What is Options Arbitrage? In options trading in India, options arbitrage is a strategy that locks in a small risk-free profit by exploiting price gaps betwe…
- What is Volatility Trading in Options? Volatility trading in options is a strategy that focuses on betting on the size of a stock's future price movements, not its direc…
- How to Use Implied Volatility to Compare Options Across Strikes To compare options across strikes, don't just look at the premium price. Instead, use Implied Volatility (IV), which shows the mar…
- How Does a Dividend Affect Options Pricing? A dividend causes call option prices to fall and put option prices to rise because the stock price drops by the dividend amount on…
- What is the Problem With the Black-Scholes Model? The primary problem with the Black-Scholes model is that it's built on unrealistic assumptions that don't hold true in real market…
- What is Delta Hedging by Market Makers? Delta hedging is a risk management strategy used by market makers to offset their exposure to price changes in an underlying asset…
- What Account Do You Need to Trade Options in India? To trade options in India, you need a Demat account to hold securities and a Trading account to place orders. Crucially, you must …
- What is STT on Options in India? Securities Transaction Tax (STT) on options in India is a direct tax levied by the government on option contracts traded on stock …
- How to Place an Options Trade on Upstox To place an options trade on Upstox, first find your desired contract using the search bar or option chain. Next, select 'Buy', en…
- How to Calculate Margin for Options Using the SPAN Calculator Calculating options margin involves using a SPAN calculator to determine the required funds for selling options. This tool assesse…
- What is a Virtual Trading Account for Options? A virtual trading account for options is a simulated environment where you can practice options trading using fake money without a…