sorry for the really basic question ....bt m new to the whole option trading ....i have learnd alot bout call n put options lately though .....bt m insanely cnfused at d basic principle concept of buying and selling options ....pls help me out ...hre goes my doubt ..........
(1)suppose i wan2 purchas a call option of nifty say @5300 strike price n 27may2010........so nw i can get it @rs.4000/- cus d rate of option nw is rs..80/- ........nw sinc it is a call option @ strik price 5300 ....so is it possible to sell d option nw if its rate increases b4 it hits d strike price (lyk say jus 4 exampl sakes....if nifty reaches 5290 n rate of CA goes to rs.87/- )is it propr 2 say dat i ll earn rs.7/- profit if i sell it nw .....so (50*7=rs.3500/-)....
or
(2)i hav a total diff view dat says dat v hav 2 sell d option afta it reaches d strike price so if i sell it nw @5290 i ll b in loss ..........n i ll earn profit only afta it reaches 5300....so if say it goes 5310 ....so i ll earn (50*10=rs.500/-)profit ...bt only afta it reaches d strike price ...
so guyz pls help me out ...wich 1 is true (1) or (2) ...so du i c d cmp ....i.e nifty rate (lyk 5270...)or option rate (lyk hre 80...).........
(1)suppose i wan2 purchas a call option of nifty say @5300 strike price n 27may2010........so nw i can get it @rs.4000/- cus d rate of option nw is rs..80/- ........nw sinc it is a call option @ strik price 5300 ....so is it possible to sell d option nw if its rate increases b4 it hits d strike price (lyk say jus 4 exampl sakes....if nifty reaches 5290 n rate of CA goes to rs.87/- )is it propr 2 say dat i ll earn rs.7/- profit if i sell it nw .....so (50*7=rs.3500/-)....
or
(2)i hav a total diff view dat says dat v hav 2 sell d option afta it reaches d strike price so if i sell it nw @5290 i ll b in loss ..........n i ll earn profit only afta it reaches 5300....so if say it goes 5310 ....so i ll earn (50*10=rs.500/-)profit ...bt only afta it reaches d strike price ...
so guyz pls help me out ...wich 1 is true (1) or (2) ...so du i c d cmp ....i.e nifty rate (lyk 5270...)or option rate (lyk hre 80...).........