Option trading for beginners: calls, puts, lot sizes and expiry days
An option is a contract with an end date. Before you buy one, know what it gives you, what it costs and when it ends.
Published 8 October 2026 · Updated 27 October 2026 · Potoos Research Services
In short. An option is a contract on an index such as the Nifty 50 or the Sensex. A call tends to gain when the index rises, a put when it falls. You trade in lots: one Nifty 50 lot is 65 units, one Sensex lot 20 units (25 from January 2027 contracts). NSE options expire on Tuesdays, BSE options on Thursdays. A buyer can lose the whole price paid; a seller can lose far more. SEBI found that 87.7% of individual F&O traders lost money in FY26.
What an option is: six terms to know
Every option has a buyer and a seller. The buyer pays for a right, with no duty attached. The seller takes the money and must pay out if the option ends with value. A clearing house, NSE Clearing on NSE, stands between them and settles both sides.
- Call option
- Tends to gain value when the index goes up. At expiry, it pays the amount by which the index closes above the strike, for each unit.
- Put option
- Tends to gain value when the index goes down. At expiry, it pays the amount by which the index closes below the strike, for each unit.
- Strike price
- The index level the option is measured against. A 20,000 call pays only if the index closes above 20,000.
- Premium
- The option's price: the buyer pays it, the seller receives it.
- Expiry
- The last day the contract exists. After that, it is settled in cash or worthless.
- Lot size
- The number of units in one contract, the smallest amount you can trade.
You can exit before expiry by trading the option back. Index options settle in cash: the seller pays any value left at expiry. Stock options on NSE settle by delivery instead. That means real shares change hands.
What a Nifty call option and a Nifty put option are
A Nifty call or put is an option on the Nifty 50 index, settled in cash against its closing level on expiry day.
They are settled automatically at expiry, and only then, if they have value. Before that, you exit by selling at the market price; you gain only if you sell for more than you paid, after costs.
An index stands at 20,000. You buy a 20,000 call for a premium of Rs 100 a unit. Assume a lot of 100 units, to keep the sums easy. You pay Rs 10,000 plus charges.
At expiry: at 19,900 the call is worthless, and you lose Rs 10,000. At 20,050 it is worth Rs 50 a unit: you still lose Rs 5,000 although the index rose. At 20,300 it is worth Rs 30,000, a gain of Rs 20,000 before charges. The buyer is ahead only above 20,100: the strike plus the premium.
The securities quoted are for illustration only and are not recommendatory.
- Up to the 20,000 strike the call expires worthless: the buyer loses the Rs 10,000 premium (Rs 100 × 100 units).
- At 20,050 the index has risen, yet the buyer is still down Rs 5,000.
- Above 20,100 (strike plus premium) the buyer is ahead: at 20,300, a gain of Rs 20,000.
- Charges and taxes are not included. The dashed line marks break-even.
Buyer and seller: same contract, very different risk
The buyer pays the premium upfront. That, plus charges, is the most the buyer can lose.
The seller (or writer) receives the premium. That is the most the seller can make, and a call seller's loss has no fixed limit. Illustration only: in the example above, if the index closed at 20,600, the seller would owe Rs 600 a unit against Rs 100 received, a Rs 50,000 loss on one lot. That is why brokers block money, called margin, from sellers.
- The buyer's loss stops at the Rs 10,000 premium. The gain grows as the index rises.
- The seller's gain stops at the same Rs 10,000. The loss keeps growing as the index rises.
Lot sizes for index options on NSE and BSE
One lot costs the premium times the lot size, plus charges. At a Rs 100 premium, one Nifty 50 lot costs Rs 6,500.
| Index | Units in one lot | Options |
|---|---|---|
| NSE (expiry on Tuesday) | ||
| Nifty 50 | 65 | Weekly, monthly |
| Nifty Bank | 30 | Monthly |
| Nifty Financial Services | 60 | Monthly |
| Nifty Midcap Select | 120 | Monthly |
| Nifty Next 50 | 25 | Monthly |
| Nifty India FPI 150 | 1,100 | Monthly |
| BSE (expiry on Thursday) | ||
| Sensex | 20; 25 for contracts expiring from January 2027 | Weekly, monthly |
| Bankex | 30 | Monthly |
| BSE Focused IT | 45 | Monthly |
Lot sizes on 27 October 2026, revised about every six months. Sources: NSE circulars NSE/FAOP/70616 (3 October 2025) and NSE/FAOP/75239 (16 July 2026); BSE notices 20260930-58 (30 September 2026) and 20260415-34 (15 April 2026). BSE also lists monthly Sensex 50 options; check their lot size on BSE.
Check the exchange's current figure before you trade.
When index options expire on NSE and BSE
SEBI allows each exchange weekly options on only one benchmark index: the Nifty 50 on NSE, the Sensex on BSE. Since 1 September 2025, NSE contracts expire on Tuesdays and BSE contracts on Thursdays.
- Nifty 50: weekly options expire every Tuesday, monthly ones on the last Tuesday.
- Nifty Bank and the other NSE indices: monthly only, on the last Tuesday. Nifty Bank also has quarterly contracts.
- Sensex: weekly options expire every Thursday, monthly ones on the last Thursday.
- Bankex, Sensex 50 and BSE Focused IT: monthly only, on the last Thursday.
- If expiry falls on a trading holiday, it moves to the previous trading day.
The schedule has changed three times since November 2024, so check it before you trade.
Why most individual traders lose money in options
A SEBI study published on 20 August 2026 found that 87.7% of individual F&O traders lost money in FY26. Options produced 92% of individuals' total losses. In options, 87.7% of traders lost money; in futures, 66.0%.
In FY26, 59% of index options turnover happened on expiry day itself. Individual traders also paid about Rs 25,000 crore in transaction costs that year.
Time decay, the small loss of value each day as expiry nears, works against buyers. Prices swing hardest near expiry. Costs come off every trade. A trade sized by hope can turn one loss into a large one. Here is how a right view can still lose money.
Option trading strategies, explained simply
These are descriptions, not recommendations.
- Buying a call
- You expect the index to rise enough before expiry. You risk the premium, and time decay works against you daily.
- Buying a put
- You expect the index to fall enough before expiry. Same risk, other direction.
- Debit spread
- Buy one option and sell another on the same index, of the same type, expiry and quantity, at a different strike. The sold option lowers your cost but caps your gain.
- Credit spread
- The same pair, but the option you sell costs more than the one you buy, so you receive money upfront. The bought option limits your loss at expiry.
- Naked option writing
- Selling an option with no protection. You collect the premium upfront, but a sharp move against you can cost many times that premium.
Our own F&O desk issues buy-side index option calls.
The SEBI rules a beginner trades under now
- Bigger contracts. New index contracts must be worth at least Rs 15 lakh (index level times lot size). Lot sizes are reset every six months to keep them at Rs 15 lakh to Rs 20 lakh.
- Premium paid upfront. SEBI required brokers to collect the full premium from buyers upfront from 1 February 2025. NSE Clearing applied it from 10 February 2025.
- One weekly index per exchange since 20 November 2024, and one expiry day per exchange: Tuesday on NSE, Thursday on BSE.
- Extra margin for sellers on expiry day: 2% more of the contract's full value, not of the premium, on index options expiring that day.
- Higher STT (securities transaction tax) from 1 April 2026, under the Finance Act, 2026. Selling an option, which is also how a buyer exits early, now costs 0.15% of the premium, up from 0.10%. An option settled at expiry with value costs the buyer 0.15% of that value, up from 0.125%.
NSE's latest lot revision cut the Nifty 50 lot from 75 to 65 units and the Nifty Bank lot from 35 to 30, for contracts expiring from January 2026.
A checklist before your first options trade
- Money you can afford to lose. Rent, fees or emergency money does not belong in options. Assume any premium can go to zero.
- Position size. Decide the most you will lose on this trade, as a small share of capital, and let that set the number of lots. If one lot breaks that limit, the trade is too large.
- Exit decided before entry. Write down your stop-loss (the price at which you cut a loss) and profit levels before you order. A stop-loss is a trigger, not a promised price. On NSE it enters as a limit order: a sell can fill below your trigger but not below your limit price, or not at all in a fast market.
- Expiry day. Any time value left runs out by the close, and prices can jump within minutes. Decide in advance whether to hold into expiry.
- Time and volatility. An option loses value daily, faster near expiry, and can also fall when the market expects smaller moves, even if the index moves your way.
- Registration. Check that anyone whose calls you follow is registered with SEBI. Here is how to verify a research analyst.
How a research call on index options is structured
A research call is a plan you can read, question, then act on or skip. A clear one states:
- The exact contract: index, call or put, strike and expiry.
- An entry range for the premium, so you do not chase a price that has run.
- A stop-loss set before entry: the level at which the idea is wrong.
- Staged targets, to decide how much to sell and when. One lot cannot be split, so this needs more than one lot.
- The reasoning, in writing, so you can disagree with it.
A call cannot control your side: your size, the price you get, and whether you follow the plan. Here is what a paid advisory can and cannot do.
How the Potoos F&O desk works
One Potoos subscription includes two desks. The F&O desk issues buy-side index option calls. The other desk covers positional NSE equity: what positional trading involves.
Every call carries an entry range, staged targets, a stop-loss set before entry, and written reasoning, published in the Potoos app the day before the market opens. Here is what a subscription delivers.
We suggest a minimum capital of Rs 50,000. A 3-month plan is Rs 2,999 and includes both desks. See the plans. Potoos is the research practice of Vinoth Kumar S, SEBI-registered Research Analyst INH000027380.
Common questions
What is a Nifty call option?
A Nifty call option tends to gain value as the Nifty 50 rises. At expiry, it pays in cash the amount by which the index closes above the strike, per unit. The buyer can lose the whole premium; the seller can lose far more.
What is the difference between a call and a put option in Nifty?
A call tends to gain as the index rises, a put as it falls. At expiry, a call pays only if the Nifty closes above its strike, a put only below it. Both settle in cash.
When do Nifty, Bank Nifty and Sensex options expire now?
On NSE, weekly Nifty 50 options expire every Tuesday and monthly ones on the last Tuesday. Bank Nifty has only monthly options, also on the last Tuesday. On BSE, weekly Sensex options expire every Thursday and monthly ones on the last Thursday. A trading holiday moves expiry to the previous trading day.
What is the lot size for Nifty, Bank Nifty and Sensex options?
On 27 October 2026: Nifty 50, 65 units; Nifty Bank, 30 units; Sensex, 20 units. BSE will raise the Sensex lot to 25 units for contracts expiring from January 2027. Check the exchange's current figure before you trade.
How much money do I need to start option trading?
Only money whose loss would not disturb your life. Brokers collect the premium upfront: one lot costs the premium times the lot size, plus charges. Sellers also need margin. For our own service, we suggest a minimum capital of Rs 50,000.
Why do most individual F&O traders lose money?
SEBI's study published on 20 August 2026 found that 87.7% of individual F&O traders lost money in FY26, and that options produced 92% of their aggregate losses. Time decay, trading crowded into expiry day, costs and oversized positions all add to losses.