Header Ads Widget



What is put option | How to buy/sell put option in Upstox | Option Trading Basics in Malayalam

Todays video explains about put option. It also explains how to buy call option in upstox. Process is similar in other brokers like zerodha or angel one.

Put option is a derivative contract between two parties. The buyer of the put option earns a right (it is not an obligation) to exercise his option to sell a particular asset to the put option seller for a stipulated period of time.

Buying a put option

Buy a Put Option when you are bearish about the prospects of the underlying. In other words, a Put option buyer is profitable only when the underlying declines in value.

The intrinsic value calculation of a Put option is slightly different when compared to the intrinsic value calculation of a call option.

IV (Put Option) = Strike Price – Spot Price.

The P&L of a Put Option buyer can be calculated as P&L = [Max (0, Strike Price – Spot Price)] – Premium Paid.

The breakeven point for the put option buyer is calculated as Strike – Premium Paid.

Selling a put option

You sell a Put option when you are bullish on a stock or when you believe the stock price will no longer go down.

When you are bullish on the underlying you can either buy the call option or sell a put option. The decision depends on how attractive the premium is.

Option Premium pricing along with Option Greeks gives a sense of how attractive the premiums are.

The put option buyer and the seller have a symmetrically opposite P&L behaviour.

When you sell a put option you receive premium.

Selling a put option requires you to deposit margin.

When you sell a put option your profit is limited to the extent of the premium you receive and your loss can potentially be unlimited.

P&L = Premium received – Max [0, (Strike Price – Spot Price)].

Breakdown point = Strike Price – Premium received.

Watch video in Malayalam 👇👇👇

Check all posts in our option trading series
1 - What is option trading | Option trading basics explained in Malayalam - https://www.teqmocharts.com/2022/07/option-trading-basics-imalayalam.html
2 - Option Trading Basics | Intrinsic value in option trading - https://www.teqmocharts.com/2022/07/option-trading-malayalam.html
3 -  What is call option | How to buy or sell a call option in Upstox - https://www.teqmocharts.com/2022/07/Call-option-malayalam.html
4 - What is put option | How to buy/sell put option in Upstox - https://www.teqmocharts.com/2022/07/what-is-put-option-how-to-buysell-put.html
5 - When to buy or sell a call or put option | 4 types of orders in options - https://www.teqmocharts.com/2022/07/when-to-buy-or-sell-call-or-put-option.html
6 - Moneyness of an option contract | In the money | At the money | Out of the money option contracts - https://www.teqmocharts.com/2022/07/moneyness-of-option-contract-in-money.html
7 - What is open interest in option trading | Open interest explained in Malayalam - https://www.teqmocharts.com/2022/07/what-is-open-interest-in-option-trading.html

Post a Comment