3. Long Call Payoff and Short Call Trade

In the previous video we discussed the various terms that are associated with options like premium, expiry, settlement etc. Karthik explained all these terms with a test trade-he bought the SBI 460 Call. In this video, we use the same trade and look at the various scenarios of how this trade will make money and lose money. We also look at how to calculate the P&L when you take an option trade by looking at the payoff chart, which is a visualization of the price points where you make or lose money.
Explore the buying call and selling call option chapters on varsity to diver Deeper: zerodha.com/va...

[@varsitybyzerodha]

Apologies, there's a small typo in the animation. The P&L on the payoff table should be a profit of Rs.17.5 at 6:25 mins, and not a loss of Rs.17.5.

[@thebeautifulroads]

no problem, we got it.

[@manojkoppula8159]

​@@thebeautifulroads I was calculating why it was negative...watched twice.

[@Biochemistrybasics]

Thanks for making such informative and insightful videos.

[@Bindaazzedits]

It's a gold in KZbin..Thanks Zerodha Varsity team

[@mathseducation6210]

Sir your information is very useful.

[@nishantbarnwal107]

Very nice video. Many doubts are clear. Keep up the good work

[@abdulwaseed]

6:95 Strike Price 495 profit -17.5

[@YouTubeFunViewer]

You mentioned loss is only 17.50 at the video 3:35 . But isn't the loss Premium x Lot size 1500 ? So the loss to the buyer is not just 17.50. it should be 17.50 x 1500

[@varsitybyzerodha]

This was just an example :) It is the loss multiplied by the lot size.

[@Unknown-gr9hl]

I think loss will be more than 26k (1500 x 17.5 ). It won't be just premium amount, could be to do with actual amount. Zerodha team plz clarify. Options are very risky trade anyway. So best if we understand fully before investing

[@ajnikhil]

Good video but seems bit off that conveniently the host left the lot size criteria out of scope to show that loss is not a lot. In actual scenario the high lot size leads to greater risk. Think losing Rs -26,000 in one trade. Viewers should realise that at the end of the day trading platforms profits from people doing Options trading :) so will always encourage people to do it.

[@ashishsingh1773]

Payoff chart of long call option at price 495 is wrong, it should be positive.

[@shrixyz]

Please explain T+0 line on the pay off chsrt

[@mathseducation6210]

Sir rojana video daliye taki sabhi concept zaldi seekh kar zerodha par account open kar trading kar sake.

[@varsitybyzerodha]

We will look into your feedback :)

[@SNK2004NIO]

How they fix a premium for the share?

[@dkaushik68]

could not understand the IV in Key takeways. What is it and how it is calculated? What is the importance of IV Value? Pls explain.

[@varsitybyzerodha]

Hey Kaushik, we've explained this here: zerodha.com/varsity/chapter/volatility-applications/

[@SouravDas-dh5mc]

At the possible expiry @495 shouldn't the P&L be +17.5 instead of -17.5 ? Can you kindly explain sir

[@vishnup5283]

I think its a mistake

[@chahatsinngh4657]

Let me answer the same question @Radhe agrwal at 495 why I loose -17.5

[@anuragkumar-mj1jj]

Realy helpful

[@garvitjain_narayanabusines6092]

Thankyou so much sir

[@v4family_irs]

Is premium and tick price is same?

[@marcomarcel9360]

When i buy a stock option if it goes negative it shows red -500 or -300 why is that happening if premium is all gone in bear market

[@varsitybyzerodha]

Hi, could you please create a ticket on support.zerodha.com, so we can have this checked and clarified for you?

[@ABHISHEKKUMAR-qy9ie]

Who sells to the buyer of call options and how do they face loss

[@Avi_2407]

The call seller / call writer sells the option to the buyer at a premium. The profits gains by the Call buyer will the loses of the seller.

[@MdFaizan-dn9ll]

Sir can we sell before the expiry date

[@rinu7426]

yes you can

[@HarbhajansinghChawlaChawla]

Sir good evening your self dicijan ok❤ ji rahe aap ke raj me tanhaiyo ke sath ❤😂🎉🎉🎉🎉🎉🎉🎉🎉🎉❤😂

[@VishalKumar-nu9zk]

Can I sell my call option shares before expiry?

[@stray8468]

in american style, yes, in european style, no.

[@Akashsahadotin]

this whole thing is only at the expire position, right????

[@priyadarshirajan]

Yes, that's correct.

[@akhilseth9079]

Can’t access the next 2 videos, they are hidden

[@varsitybyzerodha]

We will publish them in the coming weeks, stay tuned.

[@tejasnarvekar1490]

Sir kya aap hindi mi bhi blog samja sakhte ho kya?

[@varsitybyzerodha]

Hey Tejas, we'll evaluate the possibilities, thank you.

[@Yadhukrishnan-pu7uf]

Won't multiply this net profit with the total quantity

[@PythagoreanEmail]

Here the quantity is assumed to be one.

[@caitools4865]

Sir, why does the seller risk only making a profit of Rs 17.5 against an infinite loss? Can you or some one practically explain this to a novice like me? And who are the sellers in the real world?

[@varsitybyzerodha]

Hi, you can refer to this module on Varsity. You can drop in your questions on the comments section: zerodha.com/varsity/module/option-theory/

[@rangnathnaik1980]

We need to pay premium till the expiry or only one time?

[@heyParamatma]

one time times the lot size

[@MdFaizan-dn9ll]

Sir can we sell call before the expiry date