Part 9 Trading Master Class With Experts

What Are Options?

Options are derivative contracts, meaning their value is derived from an underlying asset—most commonly stocks, indices (like Nifty or Bank Nifty), commodities, or currencies.

Every option has two key components:

Strike Price – The agreed price at which the trader can buy or sell the underlying asset.

Expiry Date – The date on which the option contract ends.

Options are of two types:

• Call Option (CE)

A call option gives the buyer the right, but not the obligation, to buy the underlying asset at the strike price before expiry.

You buy a call when you expect price to go up.

• Put Option (PE)

A put option gives the buyer the right, but not the obligation, to sell the asset at the strike price before expiry.

You buy a put when you expect price to fall.

The keyword is right, not an obligation—this makes options different from futures.