The complexity is the main hurdle for the people who wish to enter F&O. Many people fail to understand terms like calls writing, put writing, unwinding, etc.
The term "unwinding" refers to the process of closing out a trading position in stock market. It is most often utilized when the trade is complicated or having big numbers.
When buying or selling happens in many transactions rather than just one, the word "unwinding" is more commonly used.
The major action taken by an investor for unwinding is to sell the share in a call Option. To unwind a Put Option, they will need to purchase the short stock back.
If a broker may sell part of a position that investor intended to add to. Theyl have to unwind the trade by first acquiring the sold stocks & then acquiring stocks.
Making a contract to sell or purchase the securities at a set cost on or before a certain date in the future is known as call writing.
When a trader sells it's position in a call option it is called as a call unwinding. This can happen due to any news or might the call option hit the target.
X has entered in a call option of abc at 1905 and buy of a target of 2010 before the expiry. When it hit the target the trader can sell the position.
In F&O segment, we advise you to learn it properly before entry. There is a risk of loss in this segment as there will be a specific date before you need to complete the trade.