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How to make money from options trading?

To earn money from options trading, you have to find out in which direction the market will go. If you think the market will go up, then you can earn money by buying call options. And if you think that the market will go down, then you can earn a profit by buying put options.

How to make money from options trading?

You can earn money from options trading only if your call or put options perform according to your estimates.

How to make profit from options trading?

If you want to make a profit from the call option, then the price of the underlying asset should be higher than the strike price before expiry. Similarly, if you want to make a profit from the put option, then the price of the underlying asset should be less than the strike price before expiry.

How much profit you will make depends on the difference between the price of your underlying asset and the strike price of the options.

That is, when you close your positions on the expiry day, the difference between your strike price and the underlying asset price will be your profit or loss.

To earn money from options trading, the rise or fall in the market does not matter because you can earn money in both ups and downs through options.

Rather, most people earn money at the time of market decline because at that time people are selling in panic, due to which the market continues to go down and the wise option trader earns profit from this recession by buying put option (PE) at the same time.

Advantages of Option Trading 

The biggest advantage of trading in options is that the loss is limited but the profit is unlimited. This means that if you buy an option by investing 1000 rupees, then your chances of loss are only 1000 rupees, while the chances of profit are countless.

Maybe if your analysis is correct, then your 1000 rupees will become 10000 rupees after some time, but you will not believe that it can be 1 lakh. Yes, your 1000 rupees can be 1 lakh rupees or more in a few minutes.

And that's the real power of options trading.

  • The right to trade more quantity in less money is only in option trading.
  • Although you get margin in intraday trading, but if you do intraday option trading, your profit is more than double.
  • You do not have to pay full money to buy any share.
  • If the stock moves according to your prediction, then you can earn a lot of money from low capital, which is not possible in simple trading.

Disadvantages of Option Trading 

There are advantages as well as disadvantages of option trading such as-

  • If you trade in options without learning, then your money can also be zero.
  • In just a few minutes, you can run out of 1 lakh or 10 lakh rupees.
  • In options trading, operators make your stop loss hit again and again because they know the trading psychology of new people very well.
    If the call or put you bought
  • If the option performs contrary to your estimate, then the value of your premium will continue to decrease.

  • FAQs About Option Trading 

    How do beginners learn options trading?

    Beginners can learn more about options trading by reading options trading books, watching YouTube videos and reading blogs.

    Can you make money from options trading?

    Yes, option trading can make money by buying and selling call and put options.

    Which is the best app for options trading?

    Zerodha and Upstox are the best best apps for options trading.

    How much money do options traders make?

    Successful option traders also earn millions of crores of rupees a day, but behind that they have years of hard work and practice.