Options Trading

 Options Trading: PE and CE trade, Lots, Premiums, 

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Hello There,

Welcome you all to our new post! 

Today we are going to talk about such a helpful and important topic from the trading point of view. We all know that 'Options' really are a great way to earn because of their extreme expandable profits but limited losses. So, let's give it a go.

• PE & CE Trades

Now, if we are talking about trading then 'Options' are a different thing from the delivery segment. In a normal purchase of stock, we buy it at its spot price or any limited price. But in Options, as the word itself says we will gonna have some options in this case rather than delivery. When we trade in Indexes available in markets then we do it in options. And the options are present in the form of a prediction of whether the graph is going up or down. So, the options we gonna have are 'Call' & 'Put'. And trades in Call and Put Options are termed CE & PE trades.

Note: We can also place trades in options for any large-cap stock but it will be going to be quite expensive.

• Understanding Put And Call

Call: When we think that any particular index will be going to be bullish, then we should place a call trade.

Put: And when it is going bearish, we should place the put trade. If it goes down, then you will make a profit.

• Premium & Lots

Lots - 

When we place a delivery trade, it's our choice how much stock we want to buy. But in options, we have to buy a collection of stocks named lots. For some indexes, one lot equals 25 or 50 stocks. But when it comes to buying options a large-cap share lot size sometimes goes to 125 shares in a single lot or more. And the fact is that if you want to trade in that stock/index then you will have to buy at least a single lot. You don't leave with any other choice. 

Premium - 

When we place a general trade, we have only one spot price of a stock where we can buy that particular stock. But in options we have different prices of an option share whether it is a CE or PE trade, doesn't matter. Now, we get a premium of a particular option but now multiply it by the total number of stocks present in that lot. And now, the result comes out is the amount to buy a single lot of that option.

Thank You,