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You receive one hundred rupees.

2
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Is that profit?

3
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Wait.

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You still have something to do.

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Meet Mira.

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She is learning option selling.

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Dev helps her check where the money goes.

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Like you, Mira wants to understand the basics.

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She sees money arrive after selling an option.

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She smiles and starts to count her earnings.

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Dev slides the unfinished trade back towards her.

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Receiving money is only the first step.

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Let's follow this trade through two possible endings.

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These examples are made up for learning.

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They do not promise income from trading.

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An option is a contract with agreed rules.

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The buyer pays for a right under those rules.

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As seller, you agree to do your part.

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You must do what the contract requires.

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In these index options, that can mean paying money.

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You receive a premium: money paid to you.

22
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You may have to pay money later.

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The contract also has an end date.

24
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You can close your trade before that date.

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To close, buy back the same option you sold.

26
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Check every contract detail, and match the quantity.

27
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Buying another option does not close this trade.

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Mira sells at one hundred rupees per unit.

29
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These prices are for one unit.

30
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A real trade can have many units.

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Later, the same option costs sixty rupees per unit.

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Mira buys it back and closes her trade.

33
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She pays sixty from the hundred she received.

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Forty rupees remain.

35
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That is profit before costs.

36
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This is still before the trading charges.

37
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Trading charges will reduce what she actually keeps.

38
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Use the prices you actually traded at.

39
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Multiply forty by the number of units you traded.

40
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Then subtract your actual trading costs from that amount.

41
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Receiving a hundred did not mean earning a hundred.

42
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Now rewind.

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Start with the same hundred rupees.

44
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This time, the option becomes more expensive.

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Buying it back costs one hundred eighty rupees.

46
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Mira buys back that same option to close.

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She needs eighty more than she first received.

48
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Her loss is eighty rupees per unit, before costs.

49
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Multiply by quantity, then include the actual costs.

50
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Costs make this losing result even worse.

51
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The price can move against you while you wait.

52
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The loss can exceed the money you first received.

53
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That first payment is not your loss limit.

54
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Selling options does not provide guaranteed income.

55
00:03:14,836 --> 00:03:18,636
Mira now opens a record of ten trades.

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Nine trades each made one thousand rupees.

57
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Together, those wins made nine thousand rupees.

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Nine wins sound good.

59
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Mira nearly stops counting.

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Dev brings the final trade into view.

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That one trade lost twelve thousand rupees.

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Subtract twelve thousand from the nine thousand won.

63
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The overall result is a three thousand rupee loss.

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That is before costs.

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Costs reduce it further.

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This is an invented example, not a typical record.

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Count how much you lose, not only wins.

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Keep every result, including the biggest losing trades.

69
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Your broker also asks for a deposit called margin.

70
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Margin supports the trade while it stays open.

71
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It is not the most you can lose.

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Your loss can be greater than that deposit.

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A hedge is another trade intended to reduce risk.

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It does not remove every risk or every loss.

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Begin with paper practice, using no real money.

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Write down each entry, exit, quantity, and trading cost.

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Record every outcome, including difficult and losing trades.

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Keep open trades separate from completed trade results.

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Check the whole record before judging any method.

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Past results cannot promise what happens next.

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First, money received is not your final profit.

82
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Mira closes the contract before checking the result.

83
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Second, count the losses and trading costs too.

84
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She keeps the losing page inside her notebook.

85
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Third, understand the risk before using real money.

86
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She puts her first plan into paper practice.

87
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You do not need to trade while learning.

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You can take time, practise, or step away.

89
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This lesson teaches the basics, not personal trading advice.

90
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Next, we look more closely at margin.

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Why can your loss be larger than your deposit?

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Keep your notebook ready.

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We will work through it.