Call Option Basics learn the basic Definition with Examples

  1. Trading for professionals: Options trading
    1. Call Option Basics learn the basic Definition with Examples
    2. Call option and put option understanding types of options
    3. What Is Call Option and How to Use It With Example
    4. Options Terminology The Master List of Options Trading Terminology
    5. Options Terms Key Options Trading Definitions
    6. Buy call option A Beginner’s Guide to Call Buying
    7. How to Calculate Profit on Call Option
    8. Selling Call Option What is Writing/Sell Call Options in Share Market?
    9. Call Option Payoff Exploring the Seller’s Perspective
    10. American vs European Options What is the Difference?
    11. Put Option A Guide for Traders
    12. put option example: Analysis of Bank Nifty and the Bearish Outlook
    13. Put option profit formula: P&L Analysis and Break-Even Point
    14. Put Option Selling strategies and Techniques for Profitable Trading
    15. Call and put option Summary Guide
    16. Option premium Understanding Fluctuations and Profit Potential in Options Trading
    17. Option Contract moneyness What It Is and How It Works
    18. option moneyness Understanding itm and otm
    19. option delta in option trading strategies
    20. delta in call and put Option Trading Strategies
    21. Option Greeks Delta vs spot price
    22. Delta Acceleration in option trading strategies
    23. Secrets of Option Greeks Delta in option trading strategies
    24. Delta as a Probability Tool: Assessing Option Profitability
    25. Gamma in option trading What Is Gamma in Investing and How Is It Used
    26. Derivatives: Exploring Delta and Gamma in Options Trading
    27. Option Gamma in options Greek
    28. Managing Risk in Options Trading: Exploring Delta, Gamma, and Position Sizing
    29. Understanding Gamma in Options Trading: Reactivity to Underlying Shifts and Strike Prices
    30. Mastering Option Greeks
    31. Time decay in options: Observing the Effect of Theta
    32. Put Option Selling: Strategies and Techniques for Profitable Trading
    33. How To Calculate Volatility on Excel
    34. Normal distribution in share market
    35. Volatility for practical trading applications
    36. Types of Volatility
    37. Vega in Option Greeks: The 4th Factors to Measure Risk
    38. Options Trading Greek Interactions
    39. Mastering Options Trading with the Greek Calculator
    40. Call and Put Option Guide
    41. Option Trading Strategies with example
    42. Physical Settlement in Option Trading
    43. Mark to Market (MTM) and Profit/Loss Calculation

The options market dominates the derivatives business, particularly in India. I am not exaggerating if I claim that options account for close to 80% of derivatives traded, with the remaining 20% coming from the futures market. The options market has been established worldwide for some time now. 

Here’s a quick background: 

  • Custom options have been offered for sale over the counter since the 1920s (OTC). The majority of these options covered commodities.
  • In 1972, the Chicago Board Options Exchange (CBOE) began trading stock option contracts.
  • In the late 1970s, bond and currency options were initially made available. They were OTC deals. 
  • Exchange-traded options on currencies were first launched in 1982 by the Philadelphia Stock Exchange.
  • On the CME, interest rate option trading first began in 1985.

The world markets have undoubtedly changed significantly since the OTC period. But since the beginning, the Indian exchanges have backed the options market. 

The off-market ‘Badla’ system offered options. Consider the ‘badla system’ as a grey market for derivatives deals. The badla system is out of date and no longer in use.

An overview of the growth of the Indian derivative markets is provided below:

  • June 12, 2000- Launch of index futures 
  • June 4, 2001- Launch of index options 
  • July 2, 2001- Launch of stock options 
  • Nov 9, 2001- Launch of single stock futures

Despite the options market’s existence since 2001, substantial liquidity for Indian index options didn’t materialise until 2006. Back then, when I was trading options, the spreads were high and obtaining fills was a significant thing. 

The Ambani brothers formally split up in 2006, and their numerous businesses were listed as distinct corporations, unlocking the value for the shareholders.

This specific business event sparked interest in the Indian markets and produced significant liquidity. However, we still have a long way to go before we can compete with the international markets in terms of liquidity.