You have ₹50,000 in your trading account. NIFTY is at 24,500. You are convinced — for whatever reason, indicator confluence, news, gut — that the market is going up. How exactly do you take that view? You don't buy NIFTY itself; that's not how F&O works. You buy an option. Which option, at which strike, for how many lots, costing how much? Those four answers are the entire game. This lesson turns them from intimidating jargon into a decision you can make in thirty seconds. Three things to cover: what CE and PE actually mean, how to pick a strike between ITM, ATM, and OTM, and what a SEBI-mandated lot size really costs you.
CE versus PE — and why we never say "sell"
CE (Call): the right to buy the underlying at a chosen strike before expiry. You buy a CE when you expect the underlying to rise.
PE (Put): the right to sell the underlying at a chosen strike before expiry. You buy a PE when you expect the underlying to fall.
Notice the framing of that second sentence. You buy a PE. You do not sell anything. This is a deliberate convention everywhere across OptionLab, and it matters more than it looks.
Selling options naked — being the writer rather than the buyer — exposes you to theoretically unlimited loss. Retail traders who sell options without margin, without hedging, without size discipline blow up. It is the single most reliable way to wreck a retail account. The buy side caps your loss at the premium you paid. Worst case: the option expires worthless and you lose what you put in. That's it. No margin calls, no overnight gap risk multiplying against you, no broker selling out your position at the worst tick.
So OptionLab's convention — across the scanner, the Strategy Lab, every doc and every lesson — is:
Bullish view → buy CE
Bearish view → buy PE
The scanner may flash a category labelled BUY or SELL, but the action a retail user takes is always buy CE or buy PE. The scanner is describing the underlying's direction; you are describing your option position. They are not the same word.
⚠ IMPORTANT CATCH
The word "sell" never describes a retail action here. Bullish? Buy CE. Bearish? Buy PE. If the temptation to sell options ever arrives, find an experienced mentor first. Until then, you are on the buy side. Premium paid = max loss. That is the rule that keeps you alive.
Strike selection — ITM vs ATM vs OTM
Same NIFTY at 24,500. Same bullish view. You have three families of CE strikes to choose from.
i
ATM — at-the-money (24,500 CE)
Strike equals the spot. Delta is around 0.5 — the option moves about half as much as the underlying. Premium in our example: ₹150. Lot size 75. Cost per lot: ₹11,250. This is where most retail trades live because it balances cost against responsiveness.
ii
OTM — out-of-the-money (24,700 CE)
Strike above spot for a CE (or below spot for a PE). Cheap — premium ₹80, lot cost ₹6,000. But delta is much lower (perhaps 0.25), so the option barely moves until the underlying actually reaches the strike. Cheap entry, lottery-ticket behaviour. Theta — time decay — eats OTM premium fast.
iii
ITM — in-the-money (24,300 CE)
Strike below spot for a CE (or above spot for a PE). Expensive — premium ₹280, lot cost ₹21,000. But delta is high (perhaps 0.75), so the option tracks the underlying closely. ITM behaves more like owning the underlying with leverage. Lower theta as a proportion of premium.
The choice is a trade-off between conviction, time to expiry, and risk appetite. Strong conviction with little time → ITM (you want the option to follow the move, not lag it). Cheap directional flyer with plenty of time → OTM. Balanced default → ATM. There is no universally correct answer; there is a correct answer for your view and your budget.
Lot sizes — SEBI-mandated, not negotiable
You cannot buy "one share" of a NIFTY option. You buy lots. SEBI defines the lot size per instrument, and the current values (effective 20 November 2024) are:
NIFTY50: 75
BANKNIFTY: 35
FINNIFTY: 65
MIDCPNIFTY: 50
SENSEX: 20
Lot size × premium = the rupee cost of one lot. Lot size × point movement = your P&L per point that the option moves. A 10-point move on a NIFTY CE that you hold one lot of = ₹750. The same 10-point move on BANKNIFTY = ₹350. Lot size is the multiplier on everything.
OptionLab's order ticket and Strategy Lab both pre-load these values — you don't compute lot math by hand. But you do need to know what the multiplier is, because that's how you decide how many lots fit your ₹50,000 capital and your stop-loss plan.
How OptionLab uses this in practice
The scanner shows a signal on the underlying — NIFTY, BANKNIFTY, a stock. It tells you the direction (BUY or SELL category, with confidence). It does not recommend a specific strike. That choice is yours, because risk appetite and capital are personal. What it does do: hand you a clean directional read on the underlying. From there, you pick CE or PE per the convention above, then pick the strike that fits your style. Strategy Lab backtests use ATM by default for cost realism so your historical results aren't inflated by cheap OTM hits.
See it live
📊 Show it live
Options 101 — Pick a strike
Instrument
Spot price
Your view
Picked: buy CE · strike 24500 (ATM)
Premium (est)
₹86
per unit
Lot cost
₹6,450
premium × 75
Max loss
₹6,450
capped at premium paid
P&L per point
₹75
per ₹1 of underlying at expiry*
Rough teaching estimate. Live OptionLab computes premium via Black-Scholes server-side using current IV. Intraday P&L differs from the per-point number above because of delta (the option doesn't move rupee-for-rupee until deep ITM).
OptionLab signals tag direction (BUY / SELL), which the user translates to buy CE / buy PE. The scanner does not pick the strike — that's your call based on conviction, capital, and risk. Strategy Lab defaults to ATM for backtest realism.
PRACTICE
Walk the strike-selection trade-off
Pick NIFTY50 on a recent trading day where the scanner showed a BUY signal during the session.
Open the option chain for that expiry. Note the premium of the ATM, one OTM (next strike up), and one ITM (next strike down) for the CE side.
Compute lot cost for each — premium × 75.
Now imagine NIFTY moved exactly 50 points by end of day. Approximate each option's P&L using rough deltas (ITM ~0.75, ATM ~0.5, OTM ~0.25).
Notice: the ITM made more rupees but tied up more capital. The OTM was cheap but barely moved. The ATM was the middle path. Different setups call for different strikes.
CE = right to buy. PE = right to sell. You are always the buyer. Bullish → buy CE. Bearish → buy PE. The word "sell" never describes a retail action here — premium paid is your max loss, and that is the rule that keeps you alive.
Strike selection: ITM = expensive, high delta, tracks underlying closely. ATM = balanced, where most retail lives. OTM = cheap, low delta, eaten alive by theta. Match the strike to your conviction and timeline.
The scanner gives you the direction on the underlying. You convert that into a CE or PE position and pick the strike. Strategy Lab uses ATM by default.
Next up: you can now read a chart, read a regime, read a level, and pick a strike. One question is still hanging — why does premium sometimes fall even when your direction was right? In the next lesson — Premium, theta, and IV — we crack open the Greeks without a single formula. That answer waits there.
तुम्हारे trading account में ₹50,000 हैं। NIFTY 24,500 पर है। तुम्हें यक़ीन है — किसी भी reason से, indicator confluence, news, gut feeling — कि market ऊपर जाएगा। यह view actually trade कैसे करोगे? तुम NIFTY ख़ुद नहीं ख़रीदते; F&O ऐसे काम नहीं करता। तुम एक option ख़रीदते हो। कौन सा option, किस strike पर, कितने lots, कितने में? इन चार सवालों का जवाब ही पूरा game है। यह lesson उन्हें intimidating jargon से तीस सेकंड में लेने वाले decision में बदल देता है। तीन चीज़ें cover करनी हैं: CE और PE का actually क्या मतलब है, ITM, ATM, और OTM के बीच strike कैसे pick करते हैं, और SEBI-mandated lot size तुम्हें actually कितने में पड़ता है।
CE versus PE — aur "sell" kabhi क्यों नहीं
CE (Call): Underlying को expiry से पहले एक chosen strike पर ख़रीदने का right। तुम CE ख़रीदते हो जब expect करते हो कि underlying ऊपर जाएगा।
PE (Put): Underlying को expiry से पहले एक chosen strike पर बेचने का right। तुम PE ख़रीदते हो जब expect करते हो कि underlying नीचे जाएगा।
दूसरी sentence का framing notice करो। तुम PE को ख़रीदते हो। तुम कुछ बेचते नहीं हो। यह OptionLab में हर जगह एक deliberate convention है, और यह दिखने से ज़्यादा matter करता है।
Naked options बेचना — writer होना, buyer नहीं — theoretically unlimited loss expose करता है। Retail traders जो options बिना margin discipline, बिना hedging, बिना size discipline बेचते हैं — blow up हो जाते हैं। एक retail account को wreck करने का यह single most reliable तरीक़ा है। Buy side तुम्हारा loss premium paid पर cap करता है। Worst case: option worthless expire हो जाता है और तुम जो डाला था वो जाता है। बस। कोई margin call नहीं, कोई overnight gap risk नहीं जो against multiply होता रहे, कोई broker worst tick पर position sell नहीं करता।
तो OptionLab का convention — scanner पर, Strategy Lab में, हर doc और हर lesson में — यही है:
Bullish view → buy CE
Bearish view → buy PE
Scanner BUY या SELL labelled category flash कर सकता है, लेकिन retail user जो action लेता है — वो हमेशा buy CE या buy PE है। Scanner underlying का direction describe कर रहा है; तुम अपनी option position describe कर रहे हो। ये एक ही शब्द नहीं हैं।
⚠ IMPORTANT CATCH
"Sell" शब्द retail action describe नहीं करता यहाँ। Bullish? Buy CE. Bearish? Buy PE. अगर कभी options बेचने का temptation आए — पहले एक experienced mentor लो। तब तक तुम buy side पर हो। Premium paid = max loss. यही rule है जो तुम्हें zinda रखता है।
Strike selection — ITM vs ATM vs OTM
वही NIFTY 24,500 पर। वही bullish view। तुम्हारे पास CE strikes के तीन families हैं choose करने के लिए।
i
ATM — at-the-money (24,500 CE)
Strike spot के equal है। Delta लगभग 0.5 — option underlying का लगभग आधा move करता है। हमारे example में premium ₹150। Lot size 75। एक lot का cost ₹11,250। ज़्यादातर retail trades यहीं रहते हैं क्योंकि यह cost और responsiveness के बीच balance है।
ii
OTM — out-of-the-money (24,700 CE)
CE के लिए strike spot से ऊपर (या PE के लिए spot से नीचे)। सस्ता — premium ₹80, lot cost ₹6,000। लेकिन delta बहुत कम (शायद 0.25), तो option तब तक हिलता नहीं जब तक underlying actually strike तक न पहुँचे। सस्ती entry, lottery-ticket behaviour। Theta — time decay — OTM premium तेज़ी से खा जाता है।
iii
ITM — in-the-money (24,300 CE)
CE के लिए strike spot से नीचे (या PE के लिए spot से ऊपर)। मेहंगा — premium ₹280, lot cost ₹21,000। लेकिन delta high (शायद 0.75), तो option underlying को क़रीब से track करता है। ITM behaviour leverage के साथ underlying owning करने जैसी है। Premium proportion के हिसाब से theta कम।
Choice conviction, time to expiry, और risk appetite के बीच trade-off है। Strong conviction + कम time → ITM (तुम चाहते हो option move follow करे, lag न करे)। Plenty of time + cheap directional flyer → OTM। Balanced default → ATM। कोई universally correct answer नहीं है; तुम्हारे view और budget के लिए एक correct answer है।
Lot sizes — SEBI-mandated, negotiable नहीं
तुम NIFTY option का "एक share" नहीं ख़रीद सकते। तुम lots ख़रीदते हो। SEBI हर instrument के लिए lot size define करता है, और current values (20 November 2024 से effective):
NIFTY50: 75
BANKNIFTY: 35
FINNIFTY: 65
MIDCPNIFTY: 50
SENSEX: 20
Lot size × premium = एक lot का rupee cost। Lot size × point movement = option के एक point हिलने पर तुम्हारा P&L। NIFTY CE के एक lot पर 10-point move = ₹750। वही 10-point move BANKNIFTY पर = ₹350। Lot size हर चीज़ पर multiplier है।
OptionLab का order ticket और Strategy Lab दोनों ये values pre-load करते हैं — तुम lot math hand से नहीं करते। लेकिन तुम्हें यह जानना ज़रूरी है कि multiplier क्या है, क्योंकि उसी से decide होता है कि तुम्हारे ₹50,000 capital और stop-loss plan में कितने lots fit होते हैं।
OptionLab इन सब को practice में कैसे use करता है
Scanner underlying पर signal दिखाता है — NIFTY, BANKNIFTY, एक stock। वो direction बताता है (BUY या SELL category, confidence के साथ)। वो किसी specific strike को recommend नहीं करता। वो choice तुम्हारी है, क्योंकि risk appetite और capital personal हैं। वो जो करता है: underlying पर एक clean directional read तुम्हें देता है। वहाँ से, तुम convention के हिसाब से CE या PE pick करते हो, फिर वो strike pick करते हो जो तुम्हारी style fit करे। Strategy Lab backtests default में ATM use करते हैं cost realism के लिए, ताकि तुम्हारे historical results सस्ते OTM hits से inflate न हों।
Live देखो
📊 Show it live
Options 101 — Pick a strike
Instrument
Spot price
Your view
Picked: buy CE · strike 24500 (ATM)
Premium (est)
₹86
per unit
Lot cost
₹6,450
premium × 75
Max loss
₹6,450
capped at premium paid
P&L per point
₹75
per ₹1 of underlying at expiry*
Rough teaching estimate. Live OptionLab computes premium via Black-Scholes server-side using current IV. Intraday P&L differs from the per-point number above because of delta (the option doesn't move rupee-for-rupee until deep ITM).
OptionLab signals tag direction (BUY / SELL), which the user translates to buy CE / buy PE. The scanner does not pick the strike — that's your call based on conviction, capital, and risk. Strategy Lab defaults to ATM for backtest realism.
PRACTICE
Strike-selection trade-off को walk करो
NIFTY50 का एक recent trading day pick करो जहाँ scanner ने session के दौरान BUY signal दिखाया।
Us expiry का option chain खोलो। CE side के लिए ATM, एक OTM (next strike up), और एक ITM (next strike down) का premium note करो।
हर एक का lot cost compute करो — premium × 75।
अब imagine करो NIFTY end of day तक exactly 50 points बढ़ गया। Rough deltas use करके हर option का P&L approximate करो (ITM ~0.75, ATM ~0.5, OTM ~0.25)।
Notice करो: ITM ने ज़्यादा rupees बनाए लेकिन ज़्यादा capital tie up किया। OTM सस्ता था लेकिन barely moved। ATM middle path था। अलग setups अलग strikes call करते हैं।
CE = right to buy. PE = right to sell. तुम हमेशा buyer हो। Bullish → buy CE. Bearish → buy PE. "Sell" शब्द retail action describe नहीं करता यहाँ — premium paid तुम्हारा max loss है, यही rule तुम्हें zinda रखता है।
Strike selection: ITM = मेहंगा, high delta, underlying को क़रीब से track। ATM = balanced, ज़्यादातर retail यहाँ। OTM = सस्ता, low delta, theta alive खा जाता है। Strike को conviction और timeline के हिसाब से match करो।
Lot sizes SEBI-mandated हैं — NIFTY50 = 75, BANKNIFTY = 35, FINNIFTY = 65, MIDCPNIFTY = 50, SENSEX = 20 (2024-11-20 से effective)।
Scanner underlying पर direction देता है। तुम उसे CE या PE position में convert करते हो और strike pick करते हो। Strategy Lab default में ATM use करता है।
आगे: अब तुम chart पढ़ सकते हो, regime पढ़ सकते हो, level पढ़ सकते हो, और strike pick कर सकते हो। एक सवाल अभी भी hanging है — premium कभी-कभी क्यों गिरता है जबकि तुम्हारा direction सही था? अगले lesson में — Premium, theta, aur IV — हम Greeks को बिना एक formula के crack करते हैं। उस answer का wait वहाँ है।
03
Quick Check
5 questions · best score saves
Har question ka turant feedback milega. Best score save hota hai.
Q1Tum NIFTY 24,500 pe bullish ho aur tumhare paas ₹50,000 capital hai. OptionLab convention ke hisaab se sahi action kya hai?
Q2Tumhe bearish view hai NIFTY pe. Sahi action kya hai?
Q3BANKNIFTY ka SEBI-mandated lot size (effective 2024-11-20) kya hai?
Q4Trader ₹50,000 capital ke saath NIFTY 24,500 pe bullish hai. ATM 24,500 CE @ ₹150, OTM 24,700 CE @ ₹80, ITM 24,300 CE @ ₹280. ITM kis liye choose karega trader?
Q5Scanner NIFTY pe BUY signal show kar raha hai. OptionLab ke hisaab se sahi sequence kya hai?