Part 7 Trading Master Class

Basics of Options in India

An option is a derivative contract that gives the holder the right but not the obligation to buy or sell an underlying asset (like Nifty, Bank Nifty, or a stock) at a predetermined price (called the strike price) before or on a specified date (expiry).

Call Option (CE): Gives the right to buy.

Put Option (PE): Gives the right to sell.

Traders use options for:

Hedging (protecting portfolio losses)

Speculation (betting on price movements)

Income generation (using premium decay)

In India, options are traded on exchanges like NSE and BSE, primarily on indices (Nifty, Bank Nifty, FinNifty) and individual stocks.