The four positions at a glance

All four, side by side

You've now met every basic building block. Here they are together — same NIFTY 22,400 strike, same 1 lot of 65 units.

1. Buy call — "I expect a rise"

2. Sell call — "I don't expect a big rise"

3. Buy put — "I expect a fall"

4. Sell put — "I don't expect a big fall"

The cheat sheet

Three patterns worth noticing

1. 1

   Buyers have limited loss, sellers have limited profit

   Whoever pays the premium can never lose more than it. Whoever receives it can never make more than it.

2. 2

   Buyer and seller always share the same breakeven

   It is the same contract, viewed from opposite sides. One person’s profit is the other’s loss.

3. 3

   Calls are about rises, puts about falls

   Buy call and sell put are both bullish-ish. Buy put and sell call are both bearish-ish. The difference is whether you want a BIG move (buy) or just NOT a big move against you (sell).