Part3 Trading Masterclass

Option Trading vs Stock Trading

Stocks = Ownership, long-term growth, dividends.

Options = Contracts, leverage, flexible strategies.

Stocks = Simpler, but capital-intensive.

Options = Complex, but require less capital and offer hedging.

For example:

Buying 100 shares of Reliance at ₹2500 = ₹2,50,000.

Buying 1 call option of Reliance at ₹100 premium with lot size 250 = only ₹25,000.
This leverage makes options attractive—but also riskier.

Real-Life Examples & Case Studies

Case 1: Bull Market
A trader buys Nifty 20000 Call at ₹200 premium. Nifty rallies to 20500. Profit = ₹300 (500 – 200). Huge return on a small premium.

Case 2: Bear Market
Investor holds TCS shares but fears a fall. Buys a protective put. When stock drops, put increases in value, reducing losses.

Case 3: Neutral Market
Trader sells an Iron Condor on Bank Nifty, betting price will stay range-bound. Premium collected = profit if market stays sideways.