How to Make Money with Options Buying : 2026 Guide

How to Make Money with Options Buying: Guide for Indian Traders

Introduction: The Real Truth About Options Buying in India

Let’s cut the fluff right away. If you’re reading this, you’ve probably heard the stories…

Someone bought a Bank Nifty Call before a breakout and turned ₹10,000 into ₹1,00,000 in a single session. Someone else bought a Put before a crash and doubled their money in minutes.

It sounds simple. Buy an option → market moves → profit.

But here’s the hard truth that most beginners never hear:

Most options buyers lose money.

Not because options buying is bad. Not because the market is manipulated. Not because brokers hunt stop-losses.

They lose because they don’t understand:

• Theta (time decay)
• IV Crush
• Greeks
• Momentum
• Position sizing
• Risk control
• Tax rules for F&O
• Why cheap OTM options look attractive but destroy accounts

If you want to be in the 5–10% who actually make money with options buying, you need to stop gambling and start trading like a business.

This guide is built exactly for that purpose. Comprehensive. Practical. No fluff. Every concept explained for Indian market conditions (NSE, Nifty, Bank Nifty, FinNifty, stock options).

Let’s dive deep.

What Is Options Buying? (Beyond the Basics)

Most people think options buying is simply “buying a Call if bullish and buying a Put if bearish.”

Technically correct. But that definition is too shallow for a trader who wants to survive.

Options buying = purchasing a defined-risk contract.

When you buy an options contract, you are paying a premium to gain:

• The right (not obligation)
• To buy or sell
• A stock or index
• At a fixed price (strike price)
• Before a fixed time (expiry date)

Your maximum loss is the premium you pay — a huge advantage over futures or stock leverage.

Types of Options Buyers

• Call Option (CE) → Buy if you expect a sharp upward move
• Put Option (PE) → Buy if you expect a sharp downward move

Options buyers need speed and momentum, because every minute you hold an option, Theta eats its value.

Understanding Moneyness: ITM vs ATM vs OTM (Critical for Survival)

One of the biggest reasons traders lose money is because they don’t understand moneyness.

Cheap options almost always LOOK attractive but rarely end profitably.

Let's break it down:

1. ITM (In-The-Money Options)

Definition:

The option already has intrinsic value.

• ITM Call → stock price > strike price
• ITM Put → stock price < strike price

Pros:

• High Delta
• Faster price movement
• Lower Theta decay
• Higher probability of profit

Cons:

• More expensive
• Lower ROI but higher win-rate

Verdict:

Best for serious directional options buyers.Professional traders prefer ITM because they behave more like futures.

2. ATM (At-The-Money Options)

Definition:

Strike price closest to the actual price.

Pros:

• Highest liquidity
• Fast Gamma (explosive movement)
• Perfect for intraday momentum plays

Cons:

• High extrinsic value
• Sensitive to Theta decay

Verdict:

Best for intraday breakout traders.

3. OTM (Out-of-The-Money Options)

Definition:

Strike price far from the current price.

Pros:

• Cheap
• High theoretical ROI

Cons:

• Low Delta (barely moves)
• Highest Theta decay
• Most expire worthless

Verdict:

Avoid unless trading extreme events.OTMs drain capital through 100 small losses.

Top Options Buying Strategies for Profit (Battle-Tested)

This is where the real money is. These options buying strategies are used by actual intraday and swing traders.

Let’s break them down one by one.

1. Momentum Breakout Strategy (For Fast Intraday Moves)

Options buyers need speed, not slow creeping moves.

Setup

Look for consolidation near:

• Resistance zones
• Psychological round levels
• Previous day high
• VWAP levels

Indicators:

• VWAP
• RSI above 60

Trigger:

Buy ATM or ITM Call when:

• Price breaks resistance
• Volume spikes
• Candle closes strong above VWAP

Best time:

• 9:20 AM – 11:30 AM
• 1:45 PM – 3:10 PM

Exit:

• Hold for 15–45 minutes
• Exit before momentum fades

This strategy works extremely well for:

• Bank Nifty
• Nifty
• FinNifty
• High beta stock options

2. The 5-Minute Scalping Strategy (9 EMA + 20 EMA)

One of the fastest strategies. Perfect for traders who love quick entries & exits.

Setup:

Timeframe → 5 min Indicators → 9 EMA & 20 EMA

Buy Call When:

• 9 EMA crosses above 20 EMA
• Candle closes above both EMAs

Buy Put When:

• 9 EMA crosses below 20 EMA
• Candle closes below both EMAs

Exit:

• Nifty: target 5–10 points
• Bank Nifty: target 10–20 points
• If candle closes inside EMAs → Exit

This strategy avoids sideways chop and works best during clean trends.

3. Event Straddle & Strangle (Volatility Strategies)

Great when you expect a big move but not sure about direction.

Straddle:

Buy ATM Call + ATM Put

Strangle:

Buy OTM Call + OTM Put

When It Works:

• Earnings
• Budget
• Elections
• RBI announcements
• Company results
• Major geopolitical events

The IV Trap:

IV shoots up before events After announcement → IV Crush Premium collapses

Better Approach:

Enter AFTER the event begins, not before.

4. Married Put Strategy (Portfolio Insurance)

Most traders ignore hedging — until markets crash. A married put protects your long-term stocks.

Setup:

Own a stock → Buy Put as insurance.

Ideal For:

• Long-term stock portfolios
• High-value holdings
• Black swan protection

This is not a trading strategy. It’s risk protection.

Options Greeks You Can't Ignore (Delta, Theta, Vega)

Understanding Greeks is essential for profitable options buying.

Delta

Measures how fast the option moves relative to the stock.

• ITM Delta: 0.7 → 0.8
• ATM Delta: ~0.5
• OTM Delta: 0.1 → 0.3

Higher Delta = Higher winning probability.

Theta (Time Decay)

Your worst enemy. Options lose value every minute.

Theta increases:

• Closer to expiry
• During sideways markets
• When volatility collapses

Never hold long positions overnight unless ITM.

Vega (Volatility Sensitivity)

High IV = expensive optionsLow IV = cheaper options

If you buy options when IV is high, IV Crush will destroy your premium.

Risk Management: How Not to Blow Up

1. 2% Rule

Never risk more than 2% of your capital per trade.

2. Never Average Losing Options

A losing option can go to zero.

3. Position Sizing

Use only 10–30% capital per trade.

4. Define Exit Before Entry

Examples:

• Exit if premium drops by 20%
• Exit if index returns to VWAP
• Exit if RSI drops below 55

Discipline > Strategy.

Options Trading and Taxes in India 

This is a major loophole in the knowledge of Indian traders.

Options Trading = Business Income

Not capital gains.

You must file ITR-3.

Turnover Rules (Very Important)

Turnover is NOT contract value.

It is:

Absolute Profit + Absolute Loss

Example: Profit = ₹50,000 Loss = ₹40,000Turnover = ₹90,000

Tax Audit Rules (2025)

• Turnover > ₹10 Crore → Mandatory Audit
• Turnover ₹2–10 Crore → Audit only if profit < 6%
• Most retail traders → No audit required

STT Hike (Oct 2024)

Government revised STT.

• Options Sale: 0.1% of premium
• Futures Sale: 0.02%

Scalpers need to adjust breakeven accordingly.

Options Trading App in India: Firstock

Speed = money in options buying. A 3–5 second delay can ruin a winning trade.

Firstock is one of the Trusted apps for options buying because:

• Extremely fast order execution
• Clean & simple interface
• Built-in TradingView charting
• Low latency
• Great for beginners & professional scalpers

If you are serious about options buying strategies, your options trading app matters.

Summary: The Options Buyer’s Rulebook

• Always trade momentum
• Avoid OTM for regular trading
• Respect Theta
• Check IV before buying
• Risk ≤ 2% per trade
• Don’t average losers
• Use ATM/ITM strikes
• Don’t overtrade
• Follow taxes properly
• Use a fast app like Firstock

FAQ

1. What is options buying in simple terms?

Options buying means paying a premium to buy a right, not an obligation, to trade a stock or index at a fixed price before expiry.

2. Is options buying profitable for small capital traders?

Yes, but only if you trade momentum. Options buying loses money in sideways markets because of Theta.

3. How much money do I need for options buying in India?

Minimum: ₹2,000–₹5,000Ideal: ₹25,000–₹50,000 so you can sustain losses and follow risk management.

4. Why do most options buyers lose money?

Because of:

• Theta decay
• Buying OTM options
• Trading in sideways markets
• No exit rule
• Trading without understanding Greeks

5. ATM vs ITM vs OTM — which is best?

• ITM: Best for directional consistency
• ATM: Best for intraday momentum
• OTM: Avoid for regular trading

6. Is options buying safer than options selling?

Safer in terms of max loss, but harder to win consistently. Selling needs large capital but provides income stability.

7. Can I hold options overnight?

Not recommended unless ITM. Theta decay at night destroys premium.

8. Do I need a CA for F&O taxes?

Recommended, especially if turnover is high. F&O filing mistakes can trigger scrutiny.

9. Which is the Most Trusted Options trading app?

Firstock — fast, stable, trader-friendly.

10. What’s the best strategy for beginners?

Momentum breakout + ATM buying is simplest and safest for learning.

Disclaimer

This article is educational only. Trading is risky. Consult a SEBI-registered advisor before making trading decisions.