How new option contracts get created?

haruns

Animal Spirits !
#1
Hi, I want to know how the new option contract are created. i have been trading option buying and then selling the same on Zerodha.

I don't see buy to open, Buy to close, sell to open, sell to close, option in the terminal. so my question is " is shorting calls or puts without first buying it creates a new contract. or is there different process for this.

i tried to short sell but was rejected due to huge margin requirement. just for for checking. i am new to this and dont have any intention of writing options as it is professionals cup of tea.

thanks
 
#2
me to have same query, as per my knowledge short selling of call or put option is called as option writing. can some one advice that is it write?
 

ankurpcl

Active Member
#3
Friend, to understand same read info as mentioned below:
1. Lets Assume you have trading account with number 12345
2. With this trade account whenever you open contract be it buy or sell
it will result in creation of new contract
3. But using same trade account if you do reverse i.e sell or buy then it wont be counted as new contract but just square off your existing position.

Hope it works for you.

Just a piece of advice options never to be used either only for buy or sell. They have to be combined together and range which you get out of that again to be hedged with either buy or sell depending on position taken.

This way only anyone can make money consistently in longer run.
 

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