Part 2 Support and Resistance

How Call Options Generate Profit

A Call Option gives you the right—but not obligation—to buy an asset at a fixed price (strike price).

You profit from a call option when:

The market price goes above the strike price.

The premium increases due to:

Price movement

Increased volatility

Reduced time to expiry near ITM levels

Example:

Nifty trading at 22,000

You buy Call 22,000 CE at ₹120

Price moves to 22,200

Premium increases to ₹200

Your Profit = (200 – 120) × Lot Size

This profit comes without buying the actual index—just the premium appreciation.