Part 12 Trading Master Class

Profit and Loss

Buyer’s profit can be unlimited (especially for call options) but the loss is limited to the premium paid.

Seller’s profit is limited to the premium received but losses can be unlimited.

Option Strategies

Traders combine calls and puts to form strategies like covered calls, straddles, strangles, spreads, etc., depending on whether they expect the market to rise, fall, or remain stable.

Uses of Options

Options are used for:

Hedging (reducing risk on existing positions)

Speculation (betting on price movements)

Income generation (through option writing)