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Options · 5 min
Options basics: CE, PE, strike, premium
An option is a contract giving the right to buy or sell at a fixed price (strike) until a fixed date (expiry).
CE and PE
CE (Call) gains when price rises. PE (Put) gains when price falls. When you buy an option you pay a premium.
Strike and ATM
Strike is the contract's price. ATM is the strike closest to the current price. Strikes far from ATM are cheaper but less likely to pay off.
Lots and risk
Options trade in lots (one NIFTY lot is 65). A buyer's maximum loss is the premium paid, but all of it can be lost.
Quiz (3 questions)
1. If you expect NIFTY to rise, which option?
2. An option buyer's maximum loss?
3. What is the ATM strike?
This is for learning only, not advice on any stock or trade.