What to do?

General
1

In equity market when bullish we buy a share when time come to profit booking we sell it, like wise in bearish. but in option market when we bullish we buy call option. when be bearish we buy put option. my question is what to do for profit booking? if i sell the option it will be option writing are not, in option writing there is un limited losses are there. tell me what to do? don’t tell square off. or exit. i want to place a target order in option buying?

2

Yes it works exactly the same way in equity markets.

If you are bullish, you buy call options and when you want to book profits you just have to sell the call options. Once you have sold, you are out of positions and there is no risk.

Similarly if you bearish, you buy puts and then sell it.

If you sell the option first (either puts/calls) then it is called option wriitng. Option writing requires margin as the losses similar to futures can be unlimited. If you are bullish you short/write puts and if you are bearish you short/write calls.

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3

Simple dude, for profit booking:

IN BULLISH CONDITION - 

  • Just buy CALLS (at lower price) and then sell it (at higher price)

IN BEARISH CONDITION -

  • Just buy PUTS (at lower price) and then sell it (at higher price)
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4

I think you got confused with selling options. It is same like we sell the stock to book profits.

Since you have already purchased the options in the first hand, selling them will not be considered as option writing. So you will not be subjected to unlimited losses. You will not need the huge margins which is required for option writing.

Since u have already purchased the option in the first place, it will now reside in your position book. You just have to sell those many quantities of the same option contract, to book profits.

So immediately after purchasing the option, you can set a limit target sell order to book profits.

Note: unlimited losses and huge margin is applicable only to NAKED option selling, which is commonly spoken as option writing. Here the person sells the option contract without buying it previously, or without owning it. That’s why huge margin and risk of infinite losses.