Understanding FNO…

I will answer it in simple words..

NIFTY JUL 9700 CE :

Once you see this, you won’t understand at first.but it’s simple.

Assume nifty index spot price (current price) is 9500 and you think that price will reach above 9700 before jul expiry(it is the last Thursday of every month).

You can buy above option and wait till expiry.. if your view is correct and price reaches above 9700 you will be in unlimited profit..

But if it falls say 9200 then you will loose only the premium paid..

Suppose above option was trading at 100 when you bought..you will loose entire 100*75=7500(here 75 specifies 1 lot)..but if it is above 9700+premium, you will be in profit ideally unlimited..

This is magic of option..

If you think market will go down then you can buy and vice versa…