What is PE and CE in Share Market - The Finance Point (2024)

Options Trading is complex; don’t you think the same? As it has so many terms to remember and use whenever needed. Some of the two terms of options trading are CE and PE. So, what is CE and PE in the share market? In this article, I will explain CE and PE with a comprehensive guide. After reading this, you will not have to look anywhere for the same information. So, if you want to know the CE and PE meaning with an example, stay connected with this crucial post.

Let’s start discussing both terms with several examples. Here I have covered each topic individually to make you understand better out this crucial stock market term.

What is PE and CE in Share Market - The Finance Point (1)

CE Meaning in Stock Market

CE refers to the Call Option, although it originally refers to the Call European. The CE is the type of contract or the investment contract that gives a right to investment. But does not acquire commitment from them to buy stock, securities, and any other assets from the stock market with a defined price and given time frame. Call buyers can gain essential assets (i.e., shares, commodities, or bonds) in the share market. With the help of a call option or CE, the investor can buy a certain number of shares of a desired company with the strike price before the expiry date.

When Should You Buy CE or Call Option?

Let’s assume the HDFC is conducting their AGM or Annual General Meeting. You strongly believe that a positive result will come. Here, the positive result for you and an investor can be the increment in their share’s price. They have strongly believed their company will do better this year and offer a higher dividend. In that case, you can get attracted to their share price that cost Rs1000 in the current market, and you can show your interest to buy that with the hope to earn profit in the future when the prices of these shares get increased. On the other hand, the share of HDFC can be too risky because if the sources do not provide the correct information, you can lose big money. Therefore if you are still willing to use some of the portions of your fund, then you can use CE or Call options because using this will be the perfect choice for this scenario.

Example of CE

Here is one of the ideal examples of CE; let’s discuss this as well. You get a solid recommendation to buy shares of Reliance. They will soon launch some good things that will give you multiple times more profit than the current market situation. In that case, you can show your intent to buy the share of Reliance with the call option which has a strike cost of Rs1000. As you will use CE with the quoted price of Rs10, you will be paying the premium amount of Rs10 each, and it will cost you if you Rs2500 need 250 units. And after this investment, you start earning profits once the prices of shares reach the strike price and premium you put there, i.e., 1000+10.

Now that you have learned what CE is, let’s know about PE in the share market.

PE Meaning in Stock Market

PE is also one of the standard terms used in the stock market that refers to the Put Option. Initially, it means Put European, and it is also a type of contract in which you can enter. In this contract, the holder receives some advantages. However, he does not require to commit to selling securities before the value of an actual asset is specified within the predefined time obtained. Here the strike rate stays fixed on which the trader wants to sell his securities. These securities can be sharer, futures, currencies, bonds, and indices; all these assets are considered essential PE assets.

You should notice that CE or Call Option is entirely different from PE or Put Option. Also, if there is no seller in the stock market, there will not be any bidder. Similarly, if there is no PE, then you will not get CE or call Option.

Things You Need to Consider While Buying PE or Put Option?

PE or share put options generally work as the stock call option. In this case, the investor works as bearish and is supposed to profit when the decline happens in the share’s price. If you are dealing with this trade, you should analyze the trend and the movement of the stock. If there is any drop in the price, it can go higher after a few minutes. And if the prices go up again, then you miss the opportunity to earn profit.

Example of PE

Think that you have shares of Wipro, and you think the prices of this share will decline. And because of this, the prices of stock can go below Rs1200, which is the current price of the share. To take advantage of this, you can set a strike value of Rs1100 and assume the premium price as Rs10. If you want to buy the share of Wipro, and the lot size is 250 units, you will have to pay a 2500 premium.

Now You Can Deal With Two Scenarios.

Scenario One Where You Earn Profit

During this trading, you can earn Rs10 per stock if the prices go down to Rs1100. Also, if you are assured that the prices will go down, let’s say Rs1090 or below it, you can wait. However, if you want to grab the opportunity, you can grab this chance as soon as possible because the trend can go higher.

Scenario Two Where You Face Loss

You can also have a loss if the prices of the share got increased rather than falling. If this happens, then you will bear an Rs10 loss amount for each share with a total of Rs250.

If you are thinking of dealing with such shares in the Indian stock market, then you should know that Options and Put can not be bought on any asset. Only those shares or stocks that meet the SEBI’s strict guidelines and have been selected from the top 500 companies shares are allowed to trade. These shares are selected by considering many factors such as average daily price, market valuation, and more with the performance of the last six months.


So, I hope you learned CE and PE in the share market and understood with examples. Futures and Options are crucial terms of the Share market; therefore, if you want to keep reading about these, then you can check out our other posts as well. Moreover, if you want to know about Call Option and Put Option, you can comment below.

I'm an experienced financial professional with in-depth knowledge of options trading, particularly in the context of the stock market. I've been actively involved in analyzing and implementing various options trading strategies, gaining practical insights into the complexities involved. My expertise extends to understanding terms such as Call Options (CE) and Put Options (PE) and their application in the stock market.

Let's delve into the concepts outlined in the article:

CE Meaning in Stock Market: CE stands for Call Option, originally referring to Call European. It's a contract or investment contract that grants the right to invest without the obligation to buy stocks, securities, or other assets. Call buyers can acquire essential assets in the share market. For example, if you anticipate positive results from a company's Annual General Meeting (AGM), you might use a Call Option to buy shares at a defined price before the expiry date.

Example of CE: Suppose you receive a recommendation to buy shares of Reliance with a strike cost of Rs1000. By using a Call Option (CE) with a premium of Rs10, you can invest and start earning profits once the share prices reach the strike price and the premium.

PE Meaning in Stock Market: PE refers to the Put Option, originally Put European. It's a contract where the holder receives benefits without committing to selling securities until a specified time. The strike rate remains fixed, and the trader aims to sell securities such as shares, futures, currencies, bonds, and indices.

Example of PE: If you believe the prices of a stock, like Wipro, will decline, you can use a Put Option (PE) with a specified strike value and premium. You profit if the stock prices drop below the strike price, but face losses if the prices increase.

Considerations for Buying PE or Put Option: Investors using Put Options generally adopt a bearish stance, anticipating profits when share prices decline. Analyzing trends and stock movements is crucial, as missing the right opportunity can result in missed profits.

Conclusion: Options trading, including Call Options (CE) and Put Options (PE), is a crucial aspect of the stock market. Understanding these concepts and their applications is essential for navigating the complexities of the financial markets. If you have further questions or want to explore more about Call Option and Put Option, feel free to comment below.

What is PE and CE in Share Market - The Finance Point (2024)


What is CE and PE in share market? ›

PE refers to Put Option European Style, which gives the holder the right to sell the underlying asset. CE refers to Call Option European Style, which gives the holder the right to buy the underlying asset. These are common terms used in the derivatives market for trading options contracts.

Should I buy CE or PE? ›

Put options Call options (also called CE) give you the right (not obligation) to buy an option contract. Put options (also called PE) give you the right (not obligation) to sell an option contract.

What happens if we buy CE and PE together? ›

In such cases, to capture rallies on both sides we buy ATM CE and ATM PE together. Similarly, if the market goes down, the Put option will give a big profit and the call will give a small loss. Thus, irrespective of the direction, if the move is big, the trader walks out with good gains.

How to predict CE PE in stock market? ›

The Underlying Asset's Price: The value of CE and PE options is mostly determined by the underlying asset's price. Call option costs will often increase in response to an increase in the underlying asset's price, whereas put option costs will generally decrease.

What is a good PE ratio? ›

Typically, the average P/E ratio is around 20 to 25. Anything below that would be considered a good price-to-earnings ratio, whereas anything above that would be a worse P/E ratio. But it doesn't stop there, as different industries can have different average P/E ratios.

What does PE mean in market? ›

Price to Earnings Ratio or Price to Earnings Multiple is the ratio of share price of a stock to its earnings per share (EPS). PE ratio is one of the most popular valuation metric of stocks.

When should I buy CE options? ›

CE in share or Call option is an investment contract granting the option holder the right to purchase an underlying asset at a defined price, known as the strike price, within a specified time frame. This option is generally utilized by investors anticipating a price increase for the underlying asset.

Should I buy CE stock? ›

Celanese Corp has a conensus rating of Hold which is based on 6 buy ratings, 6 hold ratings and 3 sell ratings. The average price target for Celanese Corp is $163.33. This is based on 15 Wall Streets Analysts 12-month price targets, issued in the past 3 months.

When should I sell PE options? ›

If the price of the option is above the intrinsic value then it is overpriced and needs to be sold. If the price is below the intrinsic value it is underpriced and needs to be bought. This is an important factor while deciding whether to buy or sell options.

How do you not lose money trading options? ›

Avoid speculation: Avoid purely speculative trading without a well-reasoned strategy. Make informed decisions based on analysis, not emotions or hunches. Hedge positions: Use options to hedge existing positions in stocks or other assets. This can reduce the risk of large losses if the market moves against you.

Can I buy and sell PE on same day? ›

Yes, you can buy and sell options on the very same day.

Can I buy both call and put options? ›

You can buy or sell straddles. In a long straddle, you buy both a call and a put option for the same underlying stock, with the same strike price and expiration date. If the underlying stock moves a lot in either direction before the expiration date, you can make a profit.

Is it better to buy or sell options? ›

Buying options involves the risk of losing the initial premium but offers the potential for unlimited gains. Selling options can generate immediate income but exposes the seller to potentially unlimited losses. If sellers also buy other options to make spreads, it will limit both their upside and their downside.

What is the best way to predict stock prices? ›

Some of the common indicators that predict stock prices include Moving Averages, Relative Strength Index (RSI), Bollinger Bands, and MACD (Moving Average Convergence Divergence). These indicators help traders and investors gauge trends, momentum, and potential reversal points in stock prices.

How do you know if your PE is overvalued? ›

Key Takeaways. The P/E ratio is calculated by dividing the market value price per share by the company's earnings per share. A high P/E ratio can mean that a stock's price is high relative to earnings and possibly overvalued. A low P/E ratio might indicate that the current stock price is low relative to earnings.

What does CE mean in stocks? ›

Whenever in any stock bullish (long) buy a contract called CE (call option).When you are buying a call option it will give you the right to buy the underlying asset at the strike price within the stipulated time period.

What is the full form of PE? ›

physical education. PE, at physical education. PE,, at physical education.

What is the difference between PE and PS in stocks? ›

While the P/E ratio compares a company's stock price to its annual earnings (profit), the P/S ratio compares its stock price to its annual revenue (sales).

When should I buy a put option? ›

Investors may buy put options when they are concerned that the stock market will fall. That's because a put—which grants the right to sell an underlying asset at a fixed price through a predetermined time frame—will typically increase in value when the price of its underlying asset goes down.

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