How is option trading balanced in zerodha?

So in options if my trade goes bad,the maximum I would loose would be the sum equal to margin but if opposite happens,the profit is infinite .How is this balanced?

Balanced as in?

You should read varsity options module here to get a hold on how options work.

Thanks for reply @ShubhS9 @siva
I read stockmarket is a zero sum game,
So the amount I gain would be the amount someone else would lose

So if my margin was 1.5 lac then my max loss would be 1.5 lac but if I had a profit then it can be more than that?How is this balanced?

if you were buying options you could earn infinite too.

Doesn’t necessarily mean it has to be one person and one broker, it’s a complex game to understand.

Margin here means for buying options or selling options? because there is no concept for margin for option buying, one pays premium upfront and seller require margin to short option.
Coming to your query, you can consider option buying like paying insurance, one pays small premium but if something happen he will get full cover so then why insurers are in the system? they collect premiums from many people and hope all premiums received will cover more than for insurance claims. Similarly most of the option buyers will loose money as most options expire worthless, that is why they say option sellers make consistent money provided they are carefully managing their positions.To understand options better you should read varsity options module for which I have given link above.

1 Like