Options & F&O

Derivatives, A to Z

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41 lessons18 h 15 min0 of 41 read

Next in the pathStep 1: What Are Derivatives? Meaning & Types

Part 01 of 10

Start here: what a derivative is

Learn what a derivative is, what a future and an option each promise, and who holds the right and who holds the duty.

Why this comes nowEvery later lesson assumes you can say what a contract promises, to whom, and at what cost.

5lessons
1 h 56 minof reading
Beginnerlevel

Step 1Lesson 01Beginner19 min
What Are Derivatives? Meaning & Types
After this you can name four derivative types and what each one promises.
You will answer
- What is a derivative?
- Can you lose more than the margin?
- The index rose. Why did the call still lose?
Why it sits hereThe first word of the course: every later lesson assumes you know a derivative's reference, size, cost and commitment.
Read lesson
Step 2Lesson 02Beginner37 min
Futures Contracts: The Obligation to Act
After this you can read a futures contract and follow its daily cash flows.
You will answer
- Every point has an equal and opposite effect
- Leverage is a distance: how far can the market move against you?
- Follow the cash each day, without counting a loss twice
Why it sits hereFutures come before options because they are the simplest promise: an obligation both ways, with margin and daily settlement.
You need first: Step 1, lesson 01
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Step 3Lesson 03Beginner24 min
Call and Put Options: The Right to Choose
After this you can read a call or put ticket and compute its cost.
You will answer
- A call needs a big enough rise
- An option can have value while you lose money
- Check what your put actually protects
Why it sits hereAn option is a futures promise with one side made optional, so it follows the lesson on obligation.
Good to know
- Delta, theta and implied volatility are only named here; Parts 3 and 4 teach them.
You need first: Step 1, lesson 01 and Step 2, lesson 02
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Step 4Lesson 04Beginner20 min
The Option Buyer vs. The Option Seller
After this you can tell a buyer's right from a writer's obligation.
You will answer
- Call or put names the contract. Buy or sell names the position.
- Premium is a price. Margin is security for an obligation.
- At expiry, check whether you owe cash or shares
Why it sits hereOnce one contract is on the table, show both sides of it: the buyer who pays a premium and the writer who owes a duty.
Good to know
- Read it again after lesson 37: the writer's duty means more once you know what margin holds.
- Planning to sell options? Read lesson 37 on margin before your first sale.
You need first: Step 3, lesson 03
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Step 5Lesson 05Beginner16 min
Moneyness: ITM, ATM, OTM and Option Premium
After this you can label strikes ITM, ATM or OTM and split a premium.
You will answer
- How do you tell ITM, ATM and OTM apart?
- Is an ITM option always a winning trade?
- Can an OTM option make money?
Why it sits hereMoneyness is the vocabulary for strike against price, and it raises the question the next part answers: what the premium is made of.
Good to know
- Implied volatility and delta appear in passing; Parts 3 and 4 teach them.
You need first: Step 3, lesson 03 and Step 4, lesson 04
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Part 02 of 10

What an option is worth

See what goes into a premium, how a model builds it, and why a live quote drifts from the model.

Why this comes nowYou know the contract; next you ask what it should cost, because every Greek in Part 3 is a slice of this one price.

3lessons
1 h 8 minof reading
Intermediatelevel

Step 6Lesson 06Intermediate23 min
The Black-Scholes-Merton Model
After this you can name the five inputs behind a model option price.
You will answer
- Which inputs do we need?
- Why can a premium move when NIFTY does not?
- How does a price become implied volatility?
Why it sits hereMoneyness ends on the question of the price before expiry; the model is the first complete answer to it.
You need first: Step 5, lesson 05
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Step 7Lesson 07Intermediate21 min
The Binomial Pricing Model
After this you can build a one-step price tree and test early exercise.
You will answer
- What does the tree represent?
- What does risk-neutral probability mean?
- How does the tree test early exercise?
Why it sits hereThe tree prices the same option in small steps, so the idea behind the formula becomes visible before you rely on it.
You need first: Step 6, lesson 06
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Step 8Lesson 08Intermediate24 min
Theoretical Deviations: Real-World Prices
After this you can compare a live quote with a model price fairly.
You will answer
- What does the spread cost?
- Will the quote cover your quantity?
- How do you investigate a price gap?
Why it sits hereModels meet real quotes: spreads, stale prices and thin strikes explain why the screen differs from the formula.
You need first: Step 6, lesson 06
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Part 03 of 10

The Greeks

Read the four numbers that show how a premium reacts to price, time, volatility and curvature.

Why this comes nowEach Greek is one input of the model price moved on its own, and the four are taught as a set so you can compare them.

4lessons
1 h 23 minof reading
Intermediate to Advancedlevel

Step 9Lesson 09Intermediate20 min
Delta: Directional Bias & Portfolio Hedging
After this you can estimate a premium change from delta and add position deltas.
You will answer
- A delta reading is not your probability of profit
- Delta is a curve, not a single number
- A futures hedge can reduce delta without removing all risk
Why it sits hereThe price from Part 2 reacts to its inputs; delta is the reaction to the underlying, the first and most used.
Good to know
- Gamma is only previewed in the last chapter; lesson 12 teaches it.
You need first: Step 6, lesson 06
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Step 10Lesson 10Intermediate21 min
Theta: Time Decay & The Trade Life Cycle
After this you can estimate daily time decay and see who pays it.
You will answer
- What does theta actually measure?
- Does every option decay faster near expiry?
- Can a long option have positive theta?
Why it sits hereTime is the second input that moves a premium, and it is the one a buyer pays and a seller collects.
Good to know
- Vega and gamma are pointed to here; lessons 11 and 12 teach them.
You need first: Step 6, lesson 06 and Step 9, lesson 09
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Step 11Lesson 11Intermediate21 min
Vega: Implied Volatility & Event-Driven Pricing
After this you can reprice an option for a volatility change.
You will answer
- What does one volatility point mean?
- Who has positive and negative Vega?
- What can happen after an event?
Why it sits hereVolatility is the third input, and the only one you cannot read off a screen; this lesson also introduces implied volatility itself.
You need first: Step 6, lesson 06 and Step 9, lesson 09
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Step 12Lesson 12Advanced21 min
Gamma: Changing Delta & Near-Expiry Risk
After this you can explain why delta shifts and why expiry risk clusters.
You will answer
- Who holds positive and negative Gamma?
- Why does expiry risk gather near the strike?
- Why does a Delta hedge need adjustment?
Why it sits hereGamma is the change in delta, so it comes after delta, theta and vega, and it closes the set of four.
Good to know
- Read it again after lesson 25: expiry day is where gamma is felt.
You need first: Step 9, lesson 09
Read lesson

Part 04 of 10

Volatility, the hidden price

Read implied volatility, judge whether it is high or low for this stock, and see why it can fall after you are right.

Why this comes nowVega introduced implied volatility; here it gets a whole part, because it is the one input you cannot see on a price screen.

4lessons
1 h 21 minof reading
Intermediate to Advancedlevel

Step 13Lesson 13Intermediate21 min
Implied Volatility (IV) and India VIX
After this you can read an IV number and what India VIX measures.
You will answer
- What does 18% actually mean?
- What does India VIX measure?
- Does higher IV make an option cost more?
Why it sits hereVega introduced implied volatility; now it gets its own lesson, because every option decision rests on it.
Good to know
- Read it again after lesson 16: IV makes more sense once you have seen it fall.
You need first: Step 11, lesson 11
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Step 14Lesson 14Intermediate18 min
IV Rank (IVR) vs. IV Percentile (IVP)
After this you can place today's IV against its own history, two ways.
You will answer
- Why is 18% not enough on its own?
- How does IV Rank place today on the range?
- Why can the two scores disagree?
Why it sits hereA single IV number has no meaning until you place it against its own past.
You need first: Step 13, lesson 13
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Step 15Lesson 15Advanced21 min
Volatility Skew and Term Structure
After this you can read a skew and a term structure honestly.
You will answer
- Why can downside protection carry higher IV?
- What changes when you compare expiries?
- How do these shapes affect a spread?
Why it sits hereIV differs by strike and by expiry; skew and term structure are the next two comparisons after history.
Good to know
- The last chapter names spreads; Part 6 teaches them.
You need first: Step 13, lesson 13
Read lesson
Step 16Lesson 16Advanced21 min
IV Crush: Why a Correct Direction Can Still Lose
After this you can see why a correct call can still lose to IV.
You will answer
- Why can IV fall after results?
- What happens to our ₹1,500 Call?
- How do different positions change the risk?
Why it sits hereThe part closes with the event that makes volatility visible: the fall after results, and why direction alone is not the result.
Good to know
- One chapter names straddles, verticals and condors; Part 6 teaches them.
You need first: Step 11, lesson 11 and Step 13, lesson 13
Read lesson

Part 05 of 10

Funding and settlement

Know what the exchange holds from you, how a contract ends, and what the 2025 rules changed.

Why this comes nowStrategies include selling, and a seller needs margin and settlement first, so the rules come just before them.

3lessons
1 h 18 minof reading
Beginner to Intermediatelevel

Step 17Lesson 37Intermediate25 min
Margin Requirements & Capital Rules
After this you can say what margin protects and what it must cover.
You will answer
- What is margin, and who is it protecting?
- Do option buyers post margin, or pay premium?
- Why can a protective leg reduce margin?
Why it sits hereStrategies include selling, and a seller needs the funding rule first, so margin comes just before them.
Good to know
- One chapter mentions vertical spreads; Part 6 teaches them.
You need first: Step 2, lesson 02 and Step 4, lesson 04
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Step 18Lesson 38Intermediate33 min
Derivatives Settlement: Cash vs. Physical Delivery
After this you can follow cash or share settlement for each kind of position.
You will answer
- Two ways an expiring contract is settled
- A small intrinsic value can accompany a large payment
- Follow the shares and funds for each position
Why it sits hereMargin is what you hold while a position lives; settlement is how it ends, so the two sit together.
Good to know
- The last chapter points to tax; Part 10 teaches it.
You need first: Step 3, lesson 03 and Step 17, lesson 37
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Step 19SEBI updateBeginner20 min
New SEBI F&O Rules 2025: What You Need to Know
After this you can explain the 2025 F&O rule changes and what to adjust.
You will answer
- What changed with weekly expiries?
- How much bigger is one lot now?
- What does upfront premium collection mean for a buyer?
Why it sits hereThe current rulebook builds on margin and settlement: contract size, one weekly expiry, upfront premium and expiry-day checks.
Good to know
- Expiry-day trading itself is taught in Part 8; calendar spreads are explained in the lesson.
You need first: Step 17, lesson 37 and Step 18, lesson 38
Read lesson

Part 06 of 10

Strategies

Combine options into defined shapes: spreads, straddles, condors, and shares with a hedge.

Why this comes nowPrice, Greeks, volatility and funding are now known, so you can judge a combination one leg at a time.

4lessons
2 h 34 minof reading
Intermediate to Advancedlevel

Step 20Lesson 17Intermediate30 min
Directional Spreads: Verticals
After this you can build and read a bull, bear, debit or credit spread.
You will answer
- What makes two options a vertical spread?
- Why is a premium credit not yet profit?
- Can debit and credit spreads express the same direction?
Why it sits hereThe first strategy: two options traded together give a bounded result and use every earlier idea in one place.
Good to know
- About to place a first live trade? Read lesson 33 on mindset first.
You need first: Step 4, lesson 04, Step 5, lesson 05 and Step 17, lesson 37
Read lesson
Step 21Lesson 18Intermediate39 min
Volatility Explosions: Straddles & Strangles
After this you can find a straddle's breakevens and compare it with a strangle.
You will answer
- Where does a long straddle break even?
- Why can a moving market still leave a loss?
- What does the cheaper strangle give up?
Why it sits hereSpreads bet on direction; straddles and strangles bet on movement, so they come second.
You need first: Step 16, lesson 16 and Step 20, lesson 17
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Step 22Lesson 19Advanced45 min
Range-Bound Income: Iron Condors
After this you can draw an iron condor's credit, breakevens and worst loss.
You will answer
- What are the four legs of an iron condor?
- What changes when one wing is wider?
- What protection does a condor buy over a short strangle?
Why it sits hereA condor is two credit spreads joined, so it needs verticals and the strangle's idea behind it.
You need first: Step 20, lesson 17 and Step 21, lesson 18
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Step 23Lesson 20Intermediate40 min
Portfolio Hedging: Covered Calls & Collars
After this you can build a covered call or a collar on shares.
You will answer
- What does a covered Call actually cover?
- How does a Put turn the covered Call into a collar?
- Can an old gain hide a loss since the hedge began?
Why it sits hereThe last strategy starts from shares you own, which is where hedging begins; Part 9 extends it to portfolios.
You need first: Step 3, lesson 03 and Step 4, lesson 04
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Part 07 of 10

Reading the market

Read an option chain, open interest, the put-call ratio and max pain, and know what each cannot tell you.

Why this comes nowStrategies need strikes, and the chain is where you pick them; its readings lead into the day contracts end.

4lessons
1 h 49 minof reading
Intermediate to Advancedlevel

Step 24Lesson 21Intermediate31 min
Decoding the Option Chain
After this you can read one row of an option chain correctly.
You will answer
- What does one row of an option chain show?
- How can volume rise while open interest does not?
- Will the displayed ask fill your whole order?
Why it sits hereYou now know what to build; the chain is the board where you find strikes, prices and size.
You need first: Step 5, lesson 05 and Step 13, lesson 13
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Step 25Lesson 22Intermediate29 min
Open Interest (OI) & The Four Phases
After this you can read price with open interest and name the four phases.
You will answer
- What do volume and open interest count?
- What do the four price and OI labels mean?
- How should you use OI without over-reading it?
Why it sits hereOpen interest is the chain's second number after price, so it follows the chain.
You need first: Step 24, lesson 21
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Step 26Lesson 23Intermediate24 min
The Put-Call Ratio (PCR)
After this you can calculate a put-call ratio and know what changes it.
You will answer
- What do OI PCR and volume PCR count?
- Does a high PCR mean fear, Put writing or a reversal?
- How do you compare PCR through a trend?
Why it sits herePCR is built from the open interest you just learned to read.
You need first: Step 25, lesson 22
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Step 27Lesson 24Advanced25 min
Max Pain Theory: Calculation and Limits
After this you can calculate max pain and study its limits.
You will answer
- What does Max Pain actually measure?
- Can hedging pull prices toward an option strike?
- How should you study the level before giving it weight?
Why it sits hereMax pain uses open interest across strikes and leads straight into the day contracts end.
You need first: Step 25, lesson 22
Read lesson

Part 08 of 10

Expiry day and events

Handle the last day of a contract and the news that moves prices around it.

Why this comes nowExpiry uses gamma, margin, settlement and the chain together, so it comes after each of them.

4lessons
2 h 33 minof reading
Advancedlevel

Step 28Lesson 25Advanced33 min
Anatomy of Expiry Day Trading
After this you can tell closing a position from letting it expire.
You will answer
- In the money does not mean in profit
- Closing the contract and letting it expire are different routes
- A small premium can sit beside a large funding obligation
Why it sits hereExpiry day uses delta, gamma, margin, settlement and the chain, so it comes after all of them.
Good to know
- Securities transaction tax appears in passing; Part 10 explains it.
You need first: Step 12, lesson 12, Step 17, lesson 37 and Step 18, lesson 38
Read lesson
Step 29Lesson 26Advanced32 min
0-DTE & Zero-to-Hero: Payoff, Execution and Risk
After this you can test a zero-to-hero story against fills, sizing and expiry.
You will answer
- What does a large premium return actually mean?
- Why can the premium change so quickly near expiry?
- Size the exposure against the account that remains
Why it sits hereThe extreme case of expiry: a tiny premium, a huge claimed return, and every reason to check it.
You need first: Step 28, lesson 25
Read lesson
Step 30Lesson 27Advanced38 min
Global Macroeconomics: Fed Rates, Yields & Data
After this you can trace a global headline to an Indian option's price.
You will answer
- How a global headline can reach an Indian option
- Why can a correct direction still leave an option worth less?
- Which event clock matters for the chosen Indian contract?
Why it sits hereEvents move the same inputs you studied; this lesson adds the rate input and the macro clock.
You need first: Step 6, lesson 06 and Step 13, lesson 13
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Step 31Lesson 28Advanced50 min
Macro Events and Expiry: Read the Right Clocks
After this you can check whether a contract still spans the event.
You will answer
- Does this contract still span the announcement?
- Reprice the same contracts after the release
- Can hedging reinforce an event move?
Why it sits hereIt joins macro events to expiry, so it closes the part.
You need first: Step 28, lesson 25 and Step 30, lesson 27
Read lesson

Part 09 of 10

Staying in the game

Size a position, set a loss limit, hedge a portfolio and plan for the day the plan fails.

Why this comes nowSizing makes sense only once you know how positions behave, fund and expire.

4lessons
1 h 33 minof reading
Intermediate to Advancedlevel

Step 32Lesson 29Intermediate32 min
Position Sizing: From Equity to Whole Lots
After this you can turn a risk allowance into a whole number of lots.
You will answer
- What does the number of lots decide?
- How do you turn an allowance into whole lots?
- Why does a loss need a bigger gain to recover?
Why it sits hereSizing needs to know how positions behave and what they need to be funded, which the earlier parts supply.
You need first: Step 17, lesson 37
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Step 33Lesson 30Intermediate31 min
Risk Per Trade and Maximum Drawdown
After this you can measure drawdown and set loss limits per trade.
You will answer
- What does a per-trade loss allowance actually control?
- How do you measure a drawdown?
- What should a drawdown trigger change?
Why it sits hereOnce lots are sized, limit the loss per trade and watch the account's fall.
You need first: Step 32, lesson 29
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Step 34Lesson 31Advanced15 min
Hedging Equity Portfolios
After this you can size a portfolio Put hedge and weigh a collar.
You will answer
- What does the Put buy you?
- How many lots do you need?
- What does a cheaper collar give up?
Why it sits hereA portfolio hedge needs lot sizing and the collar from lesson 20.
You need first: Step 23, lesson 20 and Step 32, lesson 29
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Step 35Lesson 32Advanced15 min
Surviving Black Swan Events
After this you can name what a far Put covers and leaves.
You will answer
- Why can an ordinary loss estimate fail?
- What can a far out-of-the-money Put cover?
- What risk is left even when the payoff is defined?
Why it sits hereThe last risk lesson: what no plan covers, so it ends the part.
You need first: Step 13, lesson 13 and Step 34, lesson 31
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Part 10 of 10

Discipline, records and tax

Build the habits, the record and the tax filing that turn trades into a process.

Why this comes nowProcess, journal and tax form one chain: the journal produces the records that the tax lessons ask for.

6lessons
2 h 40 minof reading
Beginner to Advancedlevel

Step 36Lesson 33Beginner18 min
The Professional Trading Mindset
After this you can judge a trade by its process rather than its result.
You will answer
- What does a planned trade that lost money tell you?
- How do you judge a method beyond its hit rate?
- What belongs in a pre-market record?
Why it sits hereProcess is judged by losing runs and drawdown, so mindset follows risk.
You need first: Step 33, lesson 30
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Step 37Lesson 34Intermediate21 min
Emotional Control in Options Trading
After this you can spot where emotion bends your entry, exit or size.
You will answer
- Where does emotion enter an options decision?
- How can fear of missing out change an entry?
- How does a recovery target affect the next order?
Why it sits hereThe mindset lesson shows the process; this one shows where it breaks.
You need first: Step 36, lesson 33
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Step 38Lesson 35Advanced32 min
Building a Mechanical Trading System
After this you can write a trading rule complete enough for someone else.
You will answer
- What makes a trading decision mechanical?
- Why must the information arrive before the decision?
- Does an order request close a position?
Why it sits herePrepared rules remove the in-the-moment choices that lesson 34 exposed.
You need first: Step 37, lesson 34
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Step 39Lesson 36Intermediate30 min
Execution & Dual-Journaling
After this you can keep two linked journals and reconcile cash to them.
You will answer
- What is dual-journaling?
- How do you reconcile receipts, costs and cash?
- Does a profit prove the process was sound?
Why it sits hereA written rule needs a record of what actually happened, and that record feeds the tax lessons.
You need first: Step 38, lesson 35
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Step 40Lesson 39Intermediate35 min
F&O Taxation and Compliance
After this you can turn an F&O record into a tax calculation.
You will answer
- Why is eligible F&O trading treated as business income?
- What does STT tax, and who pays it?
- Which records make the annual calculation defensible?
Why it sits hereTax works from the record you just learned to keep, so it follows the journal.
You need first: Step 39, lesson 36 and Step 18, lesson 38
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Step 41Lesson 40Advanced24 min
Tax Audits and Turnover Calculation for Traders
After this you can compute audit turnover and know what to hand the accountant.
You will answer
- How do closed futures trades produce audit turnover?
- Do both cash percentages have to pass?
- What should you give the accountant to reconcile?
Why it sits hereAudit turnover is the last step of the tax calculation, so the course ends here.
You need first: Step 17, lesson 37, Step 18, lesson 38 and Step 40, lesson 39
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