Understanding The Premium Chart Patterns

1. Hedging: To protect against losses in existing positions.
Example: If you own Nifty stocks but fear a market fall, buying a put option acts as insurance.

2. Speculation: To profit from expected price movements with limited risk.
Example: Buying a call if you expect prices to rise.

3. Income Generation: Selling (writing) options to earn a premium — the price paid by the buyer of the option.