Part 3 Trading Master Class

How Options Work in Practice

Let’s take a real-life relatable scenario:

👉 Suppose you think Nifty (20,000) will rise in the next week.

You buy a Nifty Call Option 20,200 Strike at premium ₹100.

Lot size = 50, so total cost = ₹5,000.

Now:

If Nifty goes to 20,400 → Your option is worth ₹200 (profit ₹5,000).

If Nifty stays at 20,000 → Option expires worthless (loss = ₹5,000).

So, with only ₹5,000, you controlled exposure worth ₹10 lakhs. That’s leverage.

Participants in Options Market

There are four main categories of traders:

Call Buyer → Expects price to go UP.

Call Seller (Writer) → Expects price to stay flat or go DOWN.

Put Buyer → Expects price to go DOWN.

Put Seller (Writer) → Expects price to stay flat or go UP.