#### irfanharun

##### New Member
Hi All,
I've just started learning the basics of options trading and wanted to get few doubts resolved.

my understanding is in buy a call option, we earn from the change in premium. is this understanding correct ?

Further, consider the following scenario:
lot size 75

I buy a call option for strike price 9200 at 226 premium. the amount ill have to pay is 75 * 226 = 16,950

Say, after i buy and the nifty reaches 9180, will i make any profit if i sell at 9180 or will i have to wait for it to cross 9200 before i start seeing any actual profit from my premium?

#### Romeo1998

##### Well-Known Member
Sir @irfanharun
i dont have very high knowledge of options, but i will try to explain in simple way...
very good understanding of options greeks is needed for better understanding of options.....
https://zerodha.com/varsity/chapter/the-option-greeks-delta-part-1/

u buy 9200CE at rs 226 when nifty is at 9142.....
so what would price of option be when nifty is at 9180.....
this depends upon how much time is left for expiry....

i am assuming volatility to be 25, so if option price is rs 226 then days for expiry would be 23, and delta would be 0.5, which means that for 2 points move in nifty, option price will move by 1 point....
so if days left for expiry is 23, n nifty goes from 9142 to 9180, then 9200ce will become from rs 226 to 245.
9200CE is out of the money and has 0 intrinsic value, and rs 226 is just time value and volatility which will keep reducing every day...

but if nifty is at 9142, and days left for expiry is 1, then 9200CE value would be at rs 25, and delta would be 0.3, which means that for 3 points move in nifty, option price will move by 1 point....
so if days left for expiry is 1, n nifty goes from 9142 to 9180, then 9200ce will become from rs 25 to 37.6...
9200CE is out of the money and has 0 intrinsic value, and rs 25 is just time value and volatility... which will decrease very quickly bcoz of being out of the money option and very close to expiry....

option buying and option shorting, both are highly dangerous, but with proper money management and understanding of options, both are highly profitable
good luck

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#### jitish

##### New Member
Zerodha varsity is quite useful for beginners as they make their chapters simple to understand. You could also try sensibull youtube channel for more info on option trading