What is options trading?
An option is a contract whose price depends on an underlying asset such as the Nifty index, Bank Nifty or a stock. It gives the buyer a right, but not an obligation, to buy or sell the underlying at a fixed price (the strike price) on or before a fixed date (the expiry). The buyer pays a premium to the seller for this right.
Call option (CE)
A call gains value when the underlying rises above the strike. Traders buy calls when their analysis points upward. In India, call options are shown as CE on trading platforms.
Put option (PE)
A put gains value when the underlying falls below the strike. Traders buy puts when their analysis points downward, or to protect an existing position. Put options are shown as PE.
In Indian markets, exchange-traded options on indices and stocks are traded in fixed lot sizes, and every contract has a set expiry. Lot sizes, expiry days and margin rules are decided by the exchanges and SEBI and change from time to time, so always check the current contract specifications on the exchange website before you trade.
ITM, ATM and OTM explained
“Moneyness” describes where the strike price sits compared with the current market price. It affects how much of the premium is real value and how much is time value.
| Term | Call option (CE) | Put option (PE) | What it means for the premium |
|---|---|---|---|
| ITM – In the money | Strike below market price | Strike above market price | Has intrinsic value plus some time value; costs more |
| ATM – At the money | Strike close to market price | Strike close to market price | Mostly time value; reacts quickly to price moves |
| OTM – Out of the money | Strike above market price | Strike below market price | Only time value; cheaper, but can fall to zero by expiry |
A cheap OTM option is not automatically a good trade. It needs a large move in the right direction, within the time left, just to break even.
How to read an option chain
The option chain lists every available strike for an expiry, with call data on one side and put data on the other. For each strike you typically see:
- LTP – the last traded premium.
- Open interest (OI) – the number of open contracts, and the change in OI during the day.
- Volume – how many contracts traded today, which shows liquidity.
- IV – implied volatility, the market’s expectation of future movement.
- Bid and ask – the best buying and selling prices; a wide gap means higher trading cost.
Traders study where open interest builds up to understand possible support and resistance zones, and use the Put-Call Ratio (PCR) as one measure of sentiment. These are context tools, not buy or sell signals. In class, option chain reading is always combined with chart analysis of the underlying before any strike is selected.
You can open a live Nifty PCR and market-mood tool from our free technical tools page.
Option Greeks, implied volatility and time decay
The Greeks estimate how an option’s premium is likely to change when one factor changes and the others stay the same.
Delta
How much the premium moves for a ₹1 move in the underlying. ATM options usually have a delta near 0.5; deep ITM options move almost like the underlying.
Gamma
How fast delta itself changes. Gamma is highest for ATM options close to expiry, which is why premiums can swing sharply on expiry day.
Theta
Time decay: how much value an option loses each day if nothing else changes. Theta works against buyers and in favour of sellers, and it speeds up as expiry approaches.
Vega
Sensitivity to implied volatility. When IV rises, premiums rise; when IV falls (for example after a big event), premiums can drop even if the price moved in your favour.
Implied volatility (IV) tends to rise before events such as results, budgets or policy announcements and to fall after them. Buying options when IV is very high, and then seeing IV collapse, is one of the most common reasons beginners lose money on a trade that was “right” on direction.
Option buying vs option selling
| Option buyer | Option seller (writer) | |
|---|---|---|
| Pays / receives | Pays the premium | Receives the premium |
| Maximum loss | Limited to the premium paid | Can be much larger than the premium received, and is unlimited for a naked call |
| Capital needed | Premium × lot size | Exchange margin, which is usually far higher than the premium |
| Time decay | Works against you | Works for you |
| Needs | A move in the right direction, quickly enough | Strict risk control, hedges and position sizing |
Neither side is “safe”. Buyers lose small amounts often; unhedged sellers can lose large amounts suddenly. That is why our course teaches hedging and position adjustments together with strategies, never separately.
Risk management for options traders
- Decide the stop-loss and exit before entering a trade
- Risk only a small, fixed share of capital per trade
- Plan the risk-reward ratio, not just the target
- Hedge sold positions instead of leaving them naked
- Avoid trading only because a premium looks cheap
- Keep a trading journal and review every loss
Important: most individual F&O traders lose money
SEBI’s study of individual traders in equity futures and options found that over 90% made net losses in FY 2024-25 (coverage of the SEBI study). Options education helps you understand these risks; it does not guarantee profits. Never trade with money you cannot afford to lose.
What you learn in our options module
Taken from our published course syllabus and course details.
- Call options (CE) and put options (PE)
- ITM, ATM and OTM options
- Option premium and how it is priced
- Premium decay (time decay)
- Option Greeks and implied volatility (IV)
- Strike price selection
- Option chain analysis
- Option buying and selling strategies
- Stock selection for options
- Hedging and position adjustments
- Risk-reward planning and stop loss
- Choosing an option trade from chart analysis
- Live market decisions during class
Chart skills that support options trading
An options trade starts with a view on the underlying. The same course also covers 25 candlestick patterns, 20 breakout and breakdown patterns, Dow theory, price action, demand and supply, six types of support and resistance, multi-timeframe analysis and, in Month 2, Smart Money Concepts such as BOS, CHoCH, Fair Value Gaps and Order Blocks. Students practise on more than 2,000 charts across the two months. See the full module list.
Who this course is for
Beginners who want to understand options properly before risking money. The Complete Trader Program starts from share market basics.
Traders who already buy options but keep losing to time decay, IV changes or unplanned exits.
Investors who want to understand how puts and hedges can protect a portfolio.
No prior trading experience is required for the Complete Trader Program. If you join only the options module, you should already be comfortable with basic chart reading; ask us on WhatsApp and we will tell you which option suits you.
How the classes work
- Online and offline batches, morning (10 am – 12 pm) or evening (8 pm – 10 pm).
- Teaching in Marathi, Hindi and English.
- Live market sessions, daily doubt solving and personal chart review.
- Class recordings for revision and a PSMIT certificate on completion.
- The options module is part of the 2-Month Complete Trader Program (₹13,999, or 6-month no-cost EMI on eligible cards). For individual course fees, please call or WhatsApp us.
Your mentors
Abhijit Sir
Leads the trading and live-market sessions and reviews students’ charts personally. As stated on our homepage, he is an NSE & BSE Authorised Person and has appeared as a market analyst on business news channels and in Marathi and English newspapers.
Priyanka Ma’am
Teaches alongside Abhijit Sir and checks every student’s chart work, so mistakes are corrected early rather than in the live market.
PSMIT has taught share market courses in Chhatrapati Sambhajinagar since 2016. Read what students say on our reviews section.
Options trading course: frequently asked questions
Do I need to know the stock market before learning options?
For the Complete Trader Program, no. It starts with share market basics and chart reading, and options are taught after those foundations. If you want only the options module, basic chart reading will help you follow the classes.
Which options are covered: index or stock options?
The course covers how options work on both indices and stocks, including option chain analysis and stock selection for options. Examples in class use live Indian market charts.
Is option buying safer than option selling?
An option buyer’s maximum loss is the premium paid, while an unhedged seller can lose much more. However, buyers lose to time decay very often. Both carry real risk, which is why the course teaches hedging and position sizing with every strategy.
Will I learn option Greeks and implied volatility?
Yes. Delta, gamma, theta, vega and implied volatility are part of the options module, explained with chart and option chain examples.
Can I trade during the course?
The course includes live market sessions where decisions are discussed in real time. Whether and how much you trade with your own money is always your decision; we teach analysis and risk control, not tips or recommendations.
Does the course guarantee profits from options?
No. No course can guarantee trading profits. Our aim is to help you understand options, manage risk and make informed decisions.
More questions about fees, batches and enrolment are answered on our FAQ page.
Official resources
- SEBI Investor WebsiteInvestor education and warnings from the market regulator.
- National Stock Exchange (NSE)Current contract specifications, lot sizes and expiry calendars.
- BSEDerivatives contract details and circulars.
Want to learn options the right way?
Online & offline batches · Chhatrapati Sambhajinagar
Options trading involves substantial risk. This page is for education only and is not investment advice or a recommendation to trade any contract.