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Call Option
A call option is a bet that the market will go up.
The Idea
Right now, Nifty is at 24,200.
You buy a Call option with strike price 24,500 and pay a premium of ₹574.
This means: you're saying "I think Nifty will go above 24,500".
But to actually make a profit, Nifty needs to go above your break-even point:
Break-even = Strike + Premium = 24500 + 574 = 25074
Why? Because you already paid ₹574. So Nifty has to go high enough for your profit to cover what you paid.
Try It — Move the Price
Future Nifty Price24,200
22,00024,500 (Strike)27,000
Break-even
25,074
Intrinsic Value
₹0
Buyer Profit
₹-574
Seller Profit
₹574
Nifty is below the strike price (24500). The call option is worthless. Buyer loses the full premium of ₹574. Seller keeps the premium.
Profit/Loss Graph
Key Takeaways
- ✓Call buyer profits when market goes above break-even
- ✓Maximum loss for buyer = premium paid (₹574)
- ✓Break-even = Strike Price + Premium
- ✓Seller profits when market stays below strike price