Why Most Beginners Lose Money Buying Calls

Buying call options feels like a jackpot move, put in a few hundred bucks, and maybe make 10x if the stock pumps. No wonder newbies love it. But here’s the hard truth: most beginners end up burning cash on calls. Have you ever given a second thought on this? Why most beginners lose money buying calls?

Well, the reason is not because calls suck, but because they play the game wrong.

What is a Call Option?

A call option is the type of option contracts that right to buy a stock at a fixed price before expiry.

Think of it like a movie ticket:

• You pay ₹200.
• If the movie’s a blockbuster : your ticket’s gold.
• If it’s a flop : ticket = useless, ₹200 gone.

That ₹200 is your premium. If the stock doesn’t move, the premium is lost.

Why Option Buyers Lose Money?

Several reasons lead to loss of options, and some of the major ones are:

1. Time Decay

Options lose value as time passes. Beginners hold, waiting for “that big move” → expiry comes → premium nearly worthless.

2. Buying Far OTM

OTM calls look tempting: “It’s only ₹150, what’s the risk?”

But the probability of profit is tiny. It’s gambling dressed as trading.

3. Skipping Market Sentiment & OI Data

Would you plan a picnic without checking the weather app?

Same mistake here. If market mood = bearish or sideways → your calls bleed no matter how cheap.

4. No Risk-Reward Math

Dropping ₹2,000 on a call with 10% odds isn’t trading, it’s gambling. Most beginners focus only on potential profits, ignoring the odds against them.

A Classic Example: Infosys Earnings

• Pre-results: Traders rush to buy OTM calls.
• Stock goes up 1%. Sounds good? Not really.
• IV (implied volatility) drops, call premiums crash.
  Result? Stock up, call buyers down.

Common Myths About Calls

• “Calls are safer than futures”: Wrong. Futures don’t decay, calls do.
• “OTM = low risk”: Nope. Low cost is not equal to a high success rate.
• “Stock up = calls profit”: Not always. The move needs to be big, and IV must hold.
• “Expiry day is the best”: No, expiry trading is a pure gamble.
• “Small premium = small risk”: Ten small losses pile into one big hole.

Smarter Ways to Trade Calls

So, if you want to trade call options, then there are certain rules that must be followed in order to avoid losses:

• Stick to ATM or slightly ITM, not lottery-ticket OTM.
• Always check the trend and OI data first.
• Trade around events (earnings, budget, RBI policy).
• Book profits early. Don’t wait till expiry.
• Only risk the money you’re fine losing. Calls can go to zero.

And if you want to take the smartest trading decision, then enroll in the option trading mentorship now. At Stock Pathshala, we provide personalized guidance and a customized learning curriculum that focuses more on your requirements.

Conclusion

Buying calls isn’t a magic way to get rich. It’s a tool. Most beginners lose because they:

• Chase cheap OTM calls,
• Ignore time decay,
• Trade without a plan.

The real edge = trade smart setups, with timing and conviction. That’s when calls shift from traps to opportunities.