Divergence Secrets

How Options Work in Real Life

Imagine buying insurance:

You pay a premium to the insurance company.

If an accident happens, you claim and get compensated.

If nothing happens, your premium is lost.

Options work the same way:

Premium = Insurance cost.

Strike Price = Insured value.

Expiry Date = Policy end date.

So, options are like insurance policies for traders!

Why Trade Options? (Advantages)

Leverage: Small capital can control a large position.

Flexibility: Profit in bullish, bearish, or sideways markets.

Hedging: Protects portfolio from big losses.

Defined Risk for Buyers: You only lose the premium paid.

Income Generation: Sellers earn premium regularly.