FINNIFTY FUTURES
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Part5 Institutional Trading

28
Why Traders Use Options
Options are not just for speculation—they serve many purposes:

🎯 Speculation
Traders can take directional bets with limited capital.

🛡️ Hedging
Protect your portfolio or a specific stock against adverse movements.

💰 Income Generation
By selling options (covered calls or puts), you can earn premium income.

🎯 Leverage
Control larger exposure with less capital, but with higher risk.

Real-World Example: Call Option
Imagine Reliance stock is at ₹2500.

You buy a Call Option with strike ₹2600, premium ₹50, expiry in 2 weeks.

Scenario A – Price goes to ₹2700:

Profit = (2700 – 2600 – 50) = ₹50 profit per share

ROI = ₹50 / ₹50 = 100%

Scenario B – Price remains ₹2500:

Loss = Full premium = ₹50 (option expires worthless)

כתב ויתור

המידע והפרסומים אינם אמורים להיות, ואינם מהווים, עצות פיננסיות, השקעות, מסחר או סוגים אחרים של עצות או המלצות שסופקו או מאושרים על ידי TradingView. קרא עוד בתנאים וההגבלות.