Part 11 Trading Master Class With Experts

What Are Options?

Options are financial contracts that give you the right, but not the obligation, to buy or sell an underlying asset (usually stocks, indices, or commodities) at a fixed price within a specific period.

There are two types of options:

Call Option – Gives the buyer the right to buy the asset at a pre-decided price (strike price).

Put Option – Gives the buyer the right to sell the asset at a pre-decided price.

Each option contract has three key components:

Strike Price – The fixed price at which you may buy or sell.

Premium – The price you pay to purchase the option.

Expiry Date – The date on which the option ceases to exist.

In India, options are cash-settled and expire weekly (for indices) or monthly (for stocks).