When does the buyer of a call option benefit?

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• When does the seller of a call option benefit?

  The seller of the call option benefits when the price of the underlying asset is below the strike price at the expiry of the contract.

• What is the effect of selling a Call Option?

  The seller of the call option has an obligation to sell the underlying asset at the strike price if the buyer of the call option chooses to execute his right. The seller receives a ‘Premium’ from the buyer.

• What is the effect of buying a Call Option?

  The buyer of the call option has the right, but not an obligation, to buy the underlying asset at the strike price at expiry. The buyer of a call option has to pay a ‘Premium’ to the seller for the privilege.

• Will Physical settlement apply to the buyer of an option?

  In short, Yes! As per the SEBI guidelines, In The Money (ITM) stock options contracts are due for physical settlement irrespective of the nature of the transaction.  Still unclear? Let us take a look at the implications of physical settlement from ...

• What is a Call Option?

  An option which gives the buyer the right, but not an obligation, to buy the underlying asset at a predetermined price on a specified date in the future. The date specified in the contract is known as the expiration date or the maturity date. The ...