Part 4 Learn Institutional Trading

The Two Sides: Option Buyer vs Option Seller

Every option trade involves two parties — a buyer and a seller (writer). Their goals are opposite:

Role Right / Obligation Risk Reward
Buyer of Call/Put Right, no obligation Limited to premium Unlimited (Call) / High (Put)
Seller (Writer) Obligation Potentially unlimited Limited to premium

Example:
If you sell a call option on Reliance at ₹3,000, and the stock rises to ₹3,200 — you must sell it at ₹3,000, incurring a loss. But if the stock stays below ₹3,000, you keep the premium as profit.

Thus, option sellers have higher risk, but they statistically profit more often due to time decay.