OPTIONS

Hey people this is my current project I am working with. Black scholes is an option pricing strategy wherein it helps us to calculate the premium of the option.... to begin with let me tell u what an option is .... options are contract which gives the buyer or the seller the right to buy/sell the undelying asset or finiancial instrument.Basically there are 2 types of options....they are "CALL option" and the "PUT option".

CALL OPTION gives the buyer of the option the right but not the obligation to buy the underlying asset.This is more favourable to the buyer of the option because the profit is unlimited and the loss would be limited(premium which he pays while buying the option).

PUT OPTION gives the seller of the option the right but not the obligation to sell the undelying asset. This is more favourable to the seller because he has various options to sell the product. This is exactly opposite to the call option.


Now you have learnt what an option is and what are the types but by no means please dont get into this option trading just by reading this blog as it could be extremely hazardous to invest in this if u r not an expert in this. Options could give u heavy profit as well as it could also loot all ur money over night.