![]() ![]() In this case, the profit is unlimited, while the loss is capped at a premium.Ĭontrary to this, an option writer is the one that receives the premium, thus focusing on earning money via the premium. Therefore, he/she has the right but not the obligation to execute the order, when the market is moving in the favor and leave the contract in case the situation is not favorable. So, an option buyer is the one who gives the premium (in both call and put cases). The one who pays the non-refundable amount or premium is the one who has the right and not the obligation to either execute the order or leave. This is further divided into two segments: option buying and option selling.Īs we know that options trading involves a contract between a buyer and seller with a price and a fixed date. Choosing one depends totally on the market sentiments and the trader and the idea of making a profit. The options trading comprises of call option and put option. But before understanding the strategies, let us have a look at what is profit in options trading. There certainly are several ways to always be in the profitable business of options trading. So, is there no way to gain profits while guarding oneself against losses? There is no doubt that options trading can be a little intimidating not just for beginners, but also for experienced individuals.īut with the high risk involved the options trading, high rewards also come in handy. Profit in options trading is often ignored by the traders because of the complexities involved in the segment.
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