Part 2 Master Candlestick Pattern

Introduction to Options Trading (Basics)

Options trading is one of the most exciting areas in the stock market. Unlike buying and selling shares directly, options allow traders to control a stock without owning it fully. This gives leverage (more exposure with less money), but it also carries risks.

An option is a contract that gives you the right (but not the obligation) to buy or sell a stock at a certain price before a certain date.

Call Option: Right to buy at a fixed price (strike price).

Put Option: Right to sell at a fixed price.

For example:
Suppose Reliance stock is ₹2500. You buy a call option with strike price ₹2600 (expiry in one month). If Reliance goes up to ₹2800, your option value rises, and you make profit without investing huge capital.

Options can be used in different ways:

To speculate (bet on direction)

To hedge (protect investments)

To earn income (through writing options)

But for beginners, blindly speculating with options is risky. That’s why strategies are important—they give a structured approach to trading instead of gambling.

Why Beginners Need Strategies Instead of Random Trades

Most new traders jump into options because they see “quick profits.” However, around 80-90% of beginners lose money in options. The main reason is lack of planning.

Here’s why strategies matter:

Risk Control: Options have unlimited loss potential if traded recklessly. Strategies limit risk.

Consistent Approach: Instead of random bets, strategies follow defined rules.

Flexibility: Strategies allow traders to profit in different market conditions (up, down, sideways).

Capital Efficiency: Beginners usually have limited funds; strategies help them maximize capital use.

Example:
Instead of buying a random call option (which can expire worthless), a beginner can use a bull call spread, reducing risk while still having profit potential.