Module 06 · Intermediate to advanced

Options

Calls, puts, time value, Greeks, volatility, spreads and settlement.

9 chapters · Concepts, worked examples and self-checks

Helpful first: Futures · Margin rules and funding

Study it. Test it. Write it down.

Correct direction can still be the wrong exposure

What are you paying for besides direction?

Consider a hypothetical call bought for ₹100. At expiry the underlying finishes ₹60 above its strike. Intrinsic value is ₹60, so the buyer loses ₹40 per unit before costs despite a positive underlying move from an assumed at-the-money entry. For a 100/110 call spread purchased for a net debit of 4, expiry loss is capped at 4 and profit at 6 per unit under a matching European-style expiry-payoff model. That boundary does not describe interim collateral, execution, exercise or settlement logistics.

Your research task

Write strike, quantity, multiplier, expiry, exercise style and settlement method for each leg. A payoff diagram with missing units is not a risk report.
Stress price, volatility and time independently. State whether the calculator models expiry payoff or pre-expiry valuation; those are different questions.
Test legging and liquidity risk. A planned two-leg position is not the same exposure while only one leg is filled.

What you should produce

Produce an expiry table, a pre-expiry scenario note and a settlement checklist. Identify which losses are bounded by the payoff structure and which operational risks remain.

The trap to avoid: Buying an expiry-day option because it looks cheap in rupees while ignoring the probability and size of losing the full premium.

Original hypothetical study exercise. Pair it with the chapter sources below; verify current contract rules and product terms separately.

Advanced learning · Research before execution

Build a process you can test.

Study operating rules, portfolio risk and strategy validation. Then work through five playbooks with explicit triggers, invalidation, sizing and no-trade conditions.

Explore the advanced track →Download the paper-trade log ↓

Chapters in this module

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01Calls, puts, buyers and writersStart with rights and obligations, then derive all four basic expiry payoff relationships.3 min read 02Moneyness, intrinsic value and time valueSeparate ITM/ATM/OTM from profitability, and explain why two options on the same underlying can behave differently.3 min read 03Delta, gamma, theta and vegaUse option Greeks and local sensitivities to explain option behavior, without treating Greeks as fixed forecasts or exact probabilities.3 min read 04Implied volatility, skew and event riskDistinguish realized variability from the volatility embedded in an option premium, including event-related repricing.3 min read 05Put–call parity and synthetic exposuresConnect calls, puts, the underlying and discounted strike value, then distinguish a theoretical relationship from an executable arbitrage.3 min read 06Option valuation models and Black–Scholes assumptionsRead the structure of a benchmark pricing model and identify where its assumptions depart from real markets.3 min read 07Vertical spreads and payoff boundariesDerive a two-strike spread, distinguish debit and credit, and separate expiry risk from early-exit and funding risk.3 min read 08Straddles, strangles and covered positionsUnderstand combined exposures without confusing premium income, hedging or a high win rate with a guaranteed return.3 min read 09Exercise, assignment and expiry planningMap all four option positions into physical-delivery obligations, and distinguish isolated premium loss from settlement funding.3 min read

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