And 400 PE will go down from Rs 4 to Rs 2 (approx.) 1.6lac) to short 1 lot of put (or even to short one lot of call)The third point we establish here is, option buying can be done with less capital, whereas option selling needs big capital.1. Option buying has limited loss and option writing has unlimited loss.2. Option buying has unlimited profit, option writing has limited profit.3. Option buying needs less capital, option writing needs more capital.Now you might be thinking, if there are so many disadvantages in option writing, why do people even do it in the first place?We will answer this in detail in the next lesson.

Source: Economic Times May 13, 2023 10:03 UTC