What is option trading ? 

What is option trading? In today’s article, we are going to learn what is option trading?  Dear reader, When a new trader comes to the Stock Market , he buys shares of companies , such as Reliance, Tata Motors, Infosys, HDFC Bank, and there are many companies whose new people buy shares. .

But when they become financially comfortable , and also understand the market very closely , then they do this option trading , now further we are going to tell you, what is option trading? And why should beginners not try option trading? How is option trading done? You are going to get answers to all these questions-

What is the option trading ? 

Dear reader, if we tell you option trading in simple language, then option trading is done inside the index, like Nifty, inside it you will get the information about the market. sentiment of the market deeply and find out where the market will be in the coming week or month. By saying that it is going to go up to, it means how much it is going to increase or how much it is going to decrease.

Options in option trading have an edge in which they are zero . becomes and when it is zero then we call it expiry .

What is expiry date? The option contract becomes absolutely zero on the expiry date, that is to say, it expires, we call it the expiry date.

There are two types of expiry dates

  1. Weekly Expiry
  2. Monthly Expiry

How many types of option trading are there? types of options trading

In option trading, you can trade in any Security, Index or Stock. Here, depending on whether you are Bullish or Bearish on the stock , you can trade in options and buy the security. , you have the right to buy or sell the security at the strike price by trading in the option.

Now here it depends on you, based on which mindset or trend you are trading the option, there are two types of option contracts on the basis of which you can trade in the option.

  1. Call Option (CE)
  2. Put Option (PE)

What is Call or Put?

Call Option (CE)

If we try to explain Call option to you in simple words, then if your market view or you think that the price of any Stock or Index is about to go up, then you buy its call option, in which you can make good profit with less capital. Can earn.

Put Option (PE)

If we try to explain Put Option to you in simple words, then if you feel that the price of any Stock or Index is going to go down then you buy its Put Option , in which you can earn good profit with less capital.

Try to explain both call and put together, then if you buy any stock index like nifty in the market today, the share price is Rs 17000 , but you can buy it from ₹ 5 to ₹ 1000 in option trading, so More shares can be bought in option trading with less money.

NOTE – Option trading is very fast, here you have to be very quick because the option turns from zero to hero in the blink of an eye and from hero to zero in the blink of an eye.

If you want to answer this in one line then it is not for beginners. Stock magazine suggests that beginners should not do option trading. Yes, once you learn then definitely earn big money from option trading. We wish you all the best.

How to do option trading ? 

You can do options trading through an online demat account (brokerage account) which allows self directed trading.

To do options trading, first you have to open a demat account. After opening a demat account, you can easily trade in options using the trading app provided by the stockbroker.

Before doing option trading, you must know some things so that it becomes easier for you to do option trading.

  1. Symbol – Stock symbol is used to identify a stock or index associated with an option contract. Like – Nifty 17500 CE, Bank Nifty 38000 CE
  2. Strike price at which you are able to exercise the option.
  3. Premium – The cost of purchasing the option is called premium.
  4. Expiry date – On the expiry date the option contract becomes absolutely zero, that is to say it ends, we call it expiry date.

Tips to keep in mind in Option Trading

  1. Select the correct Strike price
  2. Let’s manage the risk
  3. Keep track of time price action
  4. Try to Understand Option Greek and Learn it Hundred Percent
  5. Create your financial goals in option trading

Benefits of option trading! 

  1. It provides trading flexibility as well as liquidity .
  2. Compared to other types of trading options, you are able to trade with less capital here.
  3. Dear reader, you already know that options are also used for hedging . What happens with hedging is that you can save your portfolios from losses due to the ups and downs in the market.
  4. Let us tell you that you can apply any market condition in options whereas this is not possible in other trading options.

Disadvantages of option trading !

  1. Option trading is very risky. In comparison to buying Individual Stocks, ETFs , or Bonds , one may have to take a lot of risk in option trading, hence this is one of the negative points of option trading.
  2. Dear reader, It can be difficult to predict the movement of the stock price, so here it is a bit more difficult to understand the sentiment of the market, because if your guess goes wrong, options trading can cause you huge losses.
  3. Analyzing a stock or index for option trading is different from equity stock, hence it is important that you trade in it only after understanding option trading well.

How to learn option trading ? 

See, option trading is very difficult for new people but they say that there is no such thing as impossible, so first learn trading well and then come into options. Although many trainers for option trading claim that they They will teach you option trading but all they have to do is sell their course and you will never know the inside secrets, so if you want to learn option trading for free, then Stock Patrika is soon starting a YouTube channel for you in which you will learn option trading absolutely free. If you want to learn trading then you can subscribe our channel.


Have you learned today what is option trading?  how to do option trading and how to learn option trading, how many types of option trading are there and still if you have any question related to option trading, then you can feel free to tell us in the comment box, our team will answer your questions. Always ready to give Thank you very much for giving your valuable time on Stock magazine

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