Options Glossary
The words this course uses, one meaning each. A term is added only once you can use it correctly.
Positions
Long: you bought it. You hold a right. Your loss is capped at the premium you paid.
Avoid: "holding", "owning an option".
Short: you sold it. You hold an obligation. You received the premium; your loss is not capped by it.
Avoid: "writing" (same thing, older word), "shorting" (confuses with short-selling stock).
Call: a contract about upside. Pays the holder when the price ends above the strike.
Put: a contract about downside. Pays the holder when the price ends below the strike.
The four wishes: long call wants up; long put wants down; short call wants not-up; short put wants not-down. See the cheat sheet.
Contract terms
Strike: the price written in the contract. A ₹2,600 call is the right to buy at ₹2,600.
Premium: the price of the option itself, quoted per share. Multiply by lot size for rupees.
Lot: the fixed number of shares one contract covers. NIFTY is 65 (from Jan 2026), Reliance 250 in these lessons. Check your broker; lots change.
Expiry: the last day the contract exists. NIFTY weeklies expire Tuesday. After expiry the option is worth exactly its payoff, or zero.
Spot: the current market price of the underlying stock or index.
Money mechanics
Worthless: an option that expires with zero payoff. A ₹2,600 call is worthless if spot ends at or below ₹2,600. The buyer's nightmare, the seller's payday.
Margin: cash the broker blocks upfront from a seller, because the seller's promise could cost more than the premium. Buyers pay only the premium.
Mark-to-market (MTM): the daily repricing of open positions. A seller's running loss is debited from margin each evening and credited to the buyer.
Square off: closing a position before expiry. A buyer sells the same option; a seller buys it back. The two cancel.