Option Trading Basics

Apart from boosting up your knowledge base about the option market, one must avail of best commodity intraday tips in order to maintain a trade-off between the losses and profits.

• Call option : Buy

This gives the buyer of the option the right to buy a security on a specified date in future at the specified price, also known as strike price. The buyer of option pays a premium to the seller of option. The buyer of the option exercises his right if on the specified date the strike price is lower than the market price of the security.

• Put option: Buy

This gives the buyer of the option the right to sell a security on a specified date in future at the specified price .The buyer of option pays a premium to the seller of option. The buyer exercises the right if on the specified date the strike price is higher than the market price of the security.  

• Sell a Call option:   

This obligates the seller of the option to sell a security on a specified date in future at the specified price, if the buyer of the option exercises the right to transact. The seller of option receives a premium from the buyer of option. The buyer exercises the right if on the specified date.

• Sell a Put option:   

This obligates the seller of the option to buy a security on a specified date in future at the specified price, if the buyer of the option exercises the right to transact. The seller of option receives a premium from the buyer of option.

After knowing about the fundamentals, you can better understand the stock tips provided by the advisors and work accordingly.