When you consider yourself as the master piece after a few profit making trades in options but you never know when u can be a good options for others. Trust me 90% of the options buyer end up their trade with loss. And the big fish making their way out buy selling the options. And maximum times options writers are correct in terms of analysis of the market. Because they have the maximum risk as their loss is not limited to premium only.

Now you may ask, who are options writer? If so, you need to know the basic first, The people who buy call option are called call holder, and the people who sell call option are called call writers vise-versa the people who buy put option are called put holder and the people who sell put option are called put writers.

There are four way you can buy options:-
  • Buying call options:- only you have to pay the premium
  • Selling call options:- you have to pay full margin hare
  • Buying put options:- only you have to pay the  premium
  • Selling put options:-you have to pay full margin hare
Buying call option gives you a potential long position in the underlying stocks, & selling call option gives you a potential short position on underlying stocks
Vise-versa, buying put option gives a potential short position in the underlying stocks & selling a naked put gives you a potential long position.

   Basically options are not for naked buy. This has been introduced in the market for hedging purpose it helps to increase their investment, protecting and leveraging their investment. Moreover its a very powerful tools to increase your investment or hedging your investment if you have a good grip on it.

   Before buying options a trader should keep in mind 90% cases big fished snatching the money away from the small trader who are new in the market performing naked buy without knowing proper hedging technique, the plunge into the water where there are big fish always plunder the small fish.

Options are very confusing for a beginners or newbie in the markets.  Options should be taken in specific stocks which is very highly liquid. Every option had a expiry date. For some cases it may be weekly (every Thursday) for Index and for some cased it may be monthly (last Thursday of the months) for Stocks.

  Basically options moves depending on some factors Liquidity, Open interest, intrinsic value, extrinsic value, and some technical indicator i'e: Delta, Gamma, Theta, Vega, later on the technical part we will discuss in details about it.

    I am of the belief that trading and investing is not a gift that you are born with but rather a skill which you can develop over the time with practice and consistent learning and with the experiences of the previous mistakes which you have done past.