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PCR Trading Strategies

50
How Option Contracts Work

Options have three crucial components:

1. Strike Price

The price at which the buyer can buy or sell the asset.

2. Expiry Date

The date when the option contract becomes invalid (weekly/monthly expiry in India).

3. Premium

The cost of buying the option.

Buyers pay the premium.

Sellers (writers) receive the premium.

Premium fluctuates based on demand, volatility, and time remaining.

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