What is options?
An option is a type of derivative. It falls under the category of derivative, as option is financial instrument which derives its value from the underlying asset.
The underlying asset may be index, stock, equity, currency or commodities to name a few.
The option is an agreement between the buyer and seller of the option, where in the buyer has the right but not the obligation to buy or sell the specified amount of the underlying asset at a specified price on or before the specified date.
Thus if the option buyer opts to exercise the option then the seller is obligated to sell as per the contract terms or price.
The two types of options are - call option and put option
One has to clearly understand the concept of call and put option before trying it out in the real market. As any misjudgment may lead to heavy losses.
Call Option - gives the buyer the right to buy the underlying asset at a specified price
Put Option - gives the buyer the right to sell the underlying asset at a specified price
An option is a type of derivative. It falls under the category of derivative, as option is financial instrument which derives its value from the underlying asset.
The underlying asset may be index, stock, equity, currency or commodities to name a few.
The option is an agreement between the buyer and seller of the option, where in the buyer has the right but not the obligation to buy or sell the specified amount of the underlying asset at a specified price on or before the specified date.
Thus if the option buyer opts to exercise the option then the seller is obligated to sell as per the contract terms or price.
The two types of options are - call option and put option
One has to clearly understand the concept of call and put option before trying it out in the real market. As any misjudgment may lead to heavy losses.
Call Option - gives the buyer the right to buy the underlying asset at a specified price
Put Option - gives the buyer the right to sell the underlying asset at a specified price
