Apologies for the stupid question on Options Intraday . On reading about the Options ( CE and PE ) on Zerodha’s varisty , I encountered these companies who give intraday tips which have call options on a daily basis. Can someone help me understand that , suppose I buy ABC stock - CE - APR - 200 and the premium for this is 2/- . Lets presume that the tip given by company states that the amount will go from 2/- to 4/- .
As per my understanding , if I sell the CE option bought on that particular day , and the price of ABC stock goes above 200 ( post selling my CE ) . Wouldn’t I face great loss .
Hope you take the time to explain this.
Your friend - Arvind
Once you have sold your position it doesnt matter where the stock goes.
If you buy at 2 and sell at 4, you will make Rs.2 per unit minus brokerage and other taxes.
Look at the brokerage calculator for further clarification.
If you are option buyer your loss is limited to the premium u paid at the time of buying.
Lets say 100 qty * 2 premium = 200 is maximum you can lose
Once you sold it, then you pocketed the profit and doesnt matter where the stock goes afterwards. IF you bought at 2 * 100 and sold at 4*100, your profit is 200.
If you keep holding until expiry and stock goes in other direction, then option expires at 0 value, so you lose the 200, no need to sell in that case.
Thanks for helping me out on this . It really helps . @Newbie420 @himmatgill