Part 2 Trading Master Class With Experts

How Option Trading Works

Let’s take a practical example:

Suppose you buy a Nifty 50 Call Option with a strike price of ₹22,000, expiring in one month, by paying a premium of ₹100 per lot (lot size 50).

If Nifty moves up to 22,500 before expiry — your call option becomes profitable because you can buy at 22,000 (strike) and sell at 22,500 (market price).

If Nifty falls to 21,800 — your option becomes worthless, and you lose only the ₹100 premium.

In short, your risk is limited to the premium paid, but your profit potential is unlimited (for call buyers).

Similarly, for a put option, profits come when the market goes down.