Introduction to Options Trading: Basics of Calls, Puts, and Key Terminology
By CapitalKeeper | Beginner’s Guide | Indian Equities | Market Moves That Matter
Options Trading Fundamentals
Objective:
Introduce readers to the world of options trading from the basics to real-world strategies so they can start using options for hedging or income generation.
📘 This Week : Options Trading Fundamentals – Daily Breakdown
🔹 Day 1: Introduction to Options Trading
- What are options? (Calls & Puts)
- Option terminology: Strike price, premium, expiry, ITM/OTM
- Differences between options and futures
🔹 Day 2: Understanding Option Greeks
- Delta, Gamma, Theta, Vega, Rho explained
- How Greeks influence pricing and strategy
- Real-life example using Nifty options
🔹 Day 3: Common Options Strategies
- Covered call, protective put, straddle, strangle
- When and why to use each
- Risk-reward matrix
🔹 Day 4: Intraday Option Trading Setup
- Open Interest analysis
- IV crush & event trading (like results/News)
- Selecting strike prices smartly
🔹 Day 5: Risk & Psychology in Options Trading
- Stop loss and position sizing
- Managing greed and fear in options
- Journaling and review
🎯 Objective:
Get introduced to the basics of options trading calls, puts, key terms, and how options differ from futures.
📘 What You’ll Learn Today: DAY- 1
1. ✅ What are Options?
- Options are financial contracts giving the right, not obligation, to buy or sell an asset at a predetermined price before expiry.
- Two main types:
- Call Option → Right to buy
- Put Option → Right to sell
2. 🔑 Basic Terminology:
| Term | Meaning |
|---|---|
| Strike Price | The price at which the option can be exercised |
| Premium | The cost paid to buy the option |
| Expiry Date | The date on which the option contract expires |
| ITM (In-the-Money) | Option has intrinsic value (profitable if exercised now) |
| OTM (Out-of-the-Money) | Option has no intrinsic value (not profitable yet) |
3. 🔄 Options vs Futures:
| Feature | Options | Futures |
|---|---|---|
| Obligation | No obligation (buyer’s choice) | Obligation for both parties |
| Risk | Limited for buyer, unlimited for seller | High risk for both sides |
| Premium Payment | Paid upfront | No upfront premium |
| Use Case | Hedging, speculation | Hedging, speculation |
🧠 Real-Life Example:
You buy a Nifty 25000 Call Option at ₹150 premium.
If Nifty rises to 25200 before expiry, your option is in the money, and you can profit.
💡 Quick Tip:
- Beginners should start with index options (like Nifty/Bank Nifty) due to better liquidity and low manipulation.
✅ Assignment:
- Open your broker’s options chain tool and check the strike prices, premiums, and OTM/ITM labeling.
- Watch a basic explainer video on how Call & Put options work.
📌 For daily trade setups, technical learning, and smart investing tips, stay tuned to CapitalKeeper.in
📌 For more real-time updates, trade setups, and investment insights — follow us on [Telegram] and [WhatsApp Channel] subscribe to our newsletter!
📌 Disclaimer
The content provided on CapitalKeeper.in is for informational and educational purposes only and does not constitute investment, trading, or financial advice. While we strive to present accurate and up-to-date market data and analysis, we make no warranties or representations regarding the completeness, reliability, or accuracy of the information.
Stock market investments are subject to market risks, and readers/investors are advised to conduct their own due diligence or consult a SEBI-registered financial advisor before making any investment decisions. CapitalKeeper and its authors are not liable for any loss or damage, direct or indirect, arising from the use of this information.
All views and opinions expressed are personal and do not reflect the official policy or position of any agency or organization. Past performance is not indicative of future results.By using this website, you agree to the terms of this disclaimer.
