A youth hailing from Pilibhit district of Uttar Pradesh lost Rs 55 lakh through option trading in the stock market. A young man with a middle class family, started with small investment. He trapped in the trap of greed that he took a loan of Rs 45 lakh from banks and relatives for trading. Overall, he lost 55 lakh rupees within a few months.
Now the married youth has suffered a serious financial crisis of the entire family. Alam is that the children were left till their education and there was a shortage of food in the house. Now the young man has written Prime Minister Narendra Modi letter demanding assistance. Let us know what is the option trading in the market in the stock, in which the young man trapped the whole family into trouble.
Option trading is a special way to invest in the stock market. In this, you do not buy shares directly, rather you get the right to buy or sell shares at a fixed price in future. In lieu of this right you have to pay some money, it is called premium. There are two types of options call options and put options.
Call option This gives you the right to buy shares at a fixed price within the stipulated time. Suppose a share price is 100 rupees today. You took a call option that you can buy this stock for 100 rupees for a month. If after a month, the price of that share becomes 150 rupees, then you can buy profits by buying for 100 rupees.
Put option This gives you the right to sell shares at a fixed price within the stipulated time. Suppose you have taken a put option that you can sell shares for 100 rupees. Even if the price is reduced to 60 rupees later, you can still earn profits by selling for 100 rupees.
Damage in option trading can occur when the market price does not work according to your estimate and this happens frequently. You give premium when purchasing the option. If the share price does not increase or decreased according to your expectation, then you will not use the option till the expiry date. In this situation, your premium money is completely submerged. When you sell the option, you get a premium, but you have to promise to buy or sell shares at a fixed price. If the price of the market goes too much in the opposite direction, then you may suffer unlimited losses.
There can be benefit by investing money in the stock market, but there is also a risk with it. Therefore, it is important that you should invest only by research. Before putting money in the shares of any company, its financial status, business model and possibilities of growth should be known. Only rumors or someone's behest should never be purchased. Should not get into the greed to become rich quickly. All the money should not be put in the same stock. The purchase should not be done quickly by coming in fear or greed. Information should always be taken from trusted sources. Fake tips or false claims on social media should be avoided. The most important thing is that you should invest according to your ability. Never borrow or invest with money needs.
