A bought call loses its premium below the strike and gains above the breakeven
On 10 Jun 2026 the 30 Jun Nifty chain had a call at the money, the strike nearest the future. Its premium is the price of the right to buy the index at that strike until expiry. The chart shows what one bought call is worth at expiry, net of the premium, for one lot of 65 units.
A future fixes a price at the start and settles on a set expiry date. If the index rises, the buyer gains and the seller loses by the same amount, point for point. The exchange settles those gains and losses in cash every day through mark to market, so no one carries an unpaid move for long.
An option splits that promise in two. The buyer of a call has the right to buy at the strike, and the buyer of a put has the right to sell. The writer takes the other side of the obligation and collects the premium. Index options are European and cash settled, so they are exercised only at expiry, and the payout is the gap between the expiry value and the strike, if it is in the money.
Two limits matter from the first trade. The buyer's loss stops at the premium paid, while the writer can lose far more than the premium collected. A lot is the fixed size of each contract, and for Nifty it was 65 units on 10 Jun 2026. The exchange sets the lot, not the trader.
Read the payoff before the premium. The question on buying against selling uses the same chart on a pair of options.
Before you trade. Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. Read the SEBI study