Part 2 Master Candlestick Pattern

Types of Options and Market Participants
1. Call Options (Right to Buy)

A Call Option gives the holder the right to buy an asset at a strike price. Investors use calls when they expect prices to rise.

Example: Buying a TCS ₹3,000 Call at ₹100 premium means you profit if TCS rises above ₹3,100 before expiry.

2. Put Options (Right to Sell)

A Put Option gives the holder the right to sell at a strike price. Used when expecting prices to fall.

Example: Buying Infosys ₹1,500 Put at ₹50 premium pays off if Infosys drops below ₹1,450.

3. Option Market Participants

Hedgers: Reduce risk by using options as insurance. (e.g., farmer hedging crop price, or investor protecting stock portfolio).

Speculators: Bet on price movements to earn profits.

Arbitrageurs: Exploit price differences across markets.

Writers (Sellers): Earn premium by selling options but take on higher risks.

Psychology & Discipline in Option Trading

Trading is not just math. It’s mindset.

Fear of Missing Out (FOMO): Leads to impulsive trades.

Over-Leverage: Options tempt traders with small premiums, causing overtrading.

Discipline: Setting stop-loss, position sizing, and risk management is crucial.

Patience: Most successful option traders focus on probability, not prediction.