What is means of CA,CE,PA and PE in stock Option?

Question

Please give me some idea what is CA,CE,PA,PE, How I can make money by use of option? e.i when I buy call option Strk Price 200 @ 20 and current price is Rs. 180. When stock will go 190, I think Call option would be on 10, so here am I loosing money?? after 200 Call option would be Zero. so where is my profit? Please give me some examples.

Answer 1

<<<Please give me some idea what is CA,CE,PA,PE,>>>

CE -- Call option European-style settlement

PE -- Put option European-style settlement

CA -- Call option American-style settlement

PA -- Put option American-style settlement

American-style options can be exercised any time prior to expiry.

European-style options can be exercised only on the expiry day.

<<<How I can make money by use of option? e.i when I buy call option Strk Price 200 @ 20 and current price is Rs. 180. When stock will go 190, I think Call option would be on 10, so here am I loosing money?? after 200 Call option would be Zero. so where is my profit?>>>

The price of a stock option depends upon more than the price of the underlying stock, but it appears you have put options and call options confused. Call options normally go up when the price of the underlying stock goes up. Put options normally go up when the price of the underlying stock goes down.

You are correct that if you buy and option @ 20 and the price goes down to 10 you will be losing money instead of making a profit.

You need to learn more about options before attempting to trade them. Many resources are specific to a particular country's markets, and I have never looked into the Indian markets to find a good instructional site. What I can recommend is a book that is not specific to any particular market. "Option Volatility & Pricing" by Sheldon Natenberg is an excellent resource.

<<<Please give me some examples.>>>

Here are some examples of spread I have traded. By looking at all the posts in each  topic you can find all my adjustments and the final results.

http://messages.yahoo.com/Business_%26_F...

http://messages.yahoo.com/Business_%26_F...

http://messages.yahoo.com/Business_%26_F...

http://messages.yahoo.com/Business_%26_F...

Answer 2

Go to the Nasdaq website.  You will find all kinds of information about

stock trading.  Also pick up some good books (library) by Wade Cook,

Stock Market Miracles.  He explains everything about options

and gives great examples.  You have to read and study it all to understand.  It can't be explained here in a few sentences.  

The market trend determines what kind of option you should play.

In a downward trend (like now), you should play "puts".

Get educated or you will loose all your money.

Good Luck

Answer 3

You seem to know less than nothing about options which would be dangerous if you attempted to trade. Get a good book, learn the basics. Or see http://www.shareworld.co.uk/index.php?pa... and maybe http://www.shareworld.co.uk/index.php?pa...

Just take one step at a time; learn about buying call options and the factors that influence their movement.Once you got that move to buying put options ditto, then writing options.