# What is Call Put in share market…?

Hello Guys,

You are also confuse in Call Put in stock exchange…? Here i have added simple explanation about call / put.

Hope you have basic knowledge about share market.

What is Call (CE)/ Put (PE) …? : In simple terms if you predict that particular share price will go up then we will go with Call. And if you think particular Share price will go down then we will go with Put.

Example:
Current Price of TCS share is: 2485.65 per Share. Means if you want to buy one share of tcs then price of one share is 2485.65.

Now in stock market there some predefined Call and Put are available.

Like Current price of TCS is 2485.65 right…? Then in market we have predefined call like 2500, 2550, 2600,2650 and more with their basic price based on Month.

Means today’s TCS price is 2485.64

So, AUGUST 2500 CE(call) price is 32.00 per lot.

What is lot in Call / Put : If we are going to deal with Call / Put then we need to buy its define lot size. And lot Size is also defined by NSE (National Stock Exchange).

Everything Clear so far…?

So for AUGUST 2500 CE(call) price is 32.00 / 250 lot. So if you want to buy 1 lot of TCS 2500 Call then you need to pay only (32 * 250 = 8000).  Call base price is different based on their call value.  Means for AUGUST 2650 CE price will be different then AUGUST 2500 CE price.
Ex.
AUGUST 2500 CE price = 32 /1 lot = 32*250 (for buying 1 lot)
AUGUST 2650 CE price = 6/ 1 lot = 6*250 (for buying 1 lot)

Above both Call price is real price on 17th AUGUST 2017. Now if you check above both price then if Call price will far away from TCS real price(2485.65) then base price will decrease.
Means 2650 CE base price(6rs) will less then base price(32) of  2500 CE. Because 2500 have more possibilities then 2650 .

And also all Call And Put have its Due Date. Like if you check above 2650 Call of August then its due date is 31st August.

Here also one Question what is due date right..?

Now i am going to buy one 2650 AUG CE and check all things.

For buying 2650 CE / 1lot i need to pay (6*250) as 6 is current price of 2650 Call and 250 is lot size. So i need to pay 1500rs for buying AUGUST 2650 CE and its due date is 31st august. (Due date and Call base price will defined by NSE and before buying we can able to see both.)

So 1 lot of 2650 AUGUST TCS CE is added in my Account in 1500rs.

Now this one is the CALL price right and Current TCS per share price is 2485.65rs.

So we have predict that TCS per share price will go nearer to 2650. And our 2650 Call Base price is 6.

Now if  TCS share price(2485.65) will increase then our call base price(6) will also increase. Because it is going nearer to our predict price.

Think TCS price will increase with 2485.65 to 2550 then our call price will increase with 12 or 15 or 20. How much it will increase, no one know about this. But it is fix that TCS current base price(2485.65) will come near with call price(2650) then Call base price(6) will increase(14 or 16 or 20).

Now if your call base price will increase with 14 and if you want to sell 1 lot with this price then you will get profit of ((14-6)*250) = 2000 with investment of 1500 rs.

And if price will decrease from 2485.65 to 2400 then definitely our call base price (6) will decrease.(in this case we are in loss). And it will be reach at 5 , 4 or 3.

As i define we had buy 265o call which have 31st august as due data. Now if you don’t sell our Call on or before 31st August then your price will getting 0.0 after 31st AUGUST 3.15 Pm.

So, it is our suggestion to sell your call on or before its due date.(With or without profit) Otherwise you will not get a single money from your invest amount (1500) and it will become 0.

For Put PE i will update in my next article. Till date Have a Nice Future in Share market. 😉