Question

Please explain how one can make a profit buying and selling options

Answer 1

Options are financial instruments that give the option holder the right and not the obligation to buy or sell underlying assets at a pre-determined price. There are two types of options, Call options and Put options. The concept of making profits in options is based on the simple principle that the person has to buy low and sell high. Then only there will be a difference in the value of the underlying assets which will lead to earning profits. Profits can be earned by a combination of Call option and Put option. There are several strategies that help the investor to make profits from options.