Before investing into the market we have to undergo a thorough study of the company’s market performance for at least two years. we have to follow the market rather than forecasting things. As a retailer we have to go for technical approach rather than fundamental analysis.
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Put option buyer makes money when spot price goes below the strike price.. however the profit is calculated by seen the premium paid to buy the options.
Dear sir @eqsis
This way of making profit is applicable only when the buyer of the option holds it till the date of expiry of the option where square off is automatic..During the currency of the PUT option ( even if the strike is at OTM ) the buyer can make profit (by difference in premium paid and received through square off) when the market price goes DOWN after the purchase of the PUT option.
Answer for Q 2
Buyer of CALL/PUT option has the RIGHT and NOT bound to buy/sell and there fore it is not mandatory
Dear vedanayagam sir,
You are right, option traders can make / lose money based on the underlying price behavior. The premium paid to by right against premium received to sell right can be seen as profit or loss..
Dear sir
Thank you for your quick reply. Kindly rectify my views/replies as and when required .