What are OPTIONS ???

Have you ever bet that India/Australia will win cricket match? You are betting if India will win or lose match.

Similarly, in OPTIONS we have
(i) CALLs (like win) and
(ii) PUTs (like losing).

If you think stock/index will rise you can buy CALLs, or if you think stock/index will fall you can buy PUTs.

Options can be on individual stocks or on index.

Premium is the value paid for buying CALL/PUT. If the stock/index value rises the value of premium of CALL will rise, where as value of PUT will decrease.

CALL is also gives right to sell stock at certain preset value.
PUT is right to buy stock at preset value.

Generally options are read as following RELIANCE CALL 1100 @78
RELIANCE-->Stock name
CALL-->Type of option
1100-->Strike price
78--> Premium value

Strike price is the price at which an underlying stock must be bought (call) or sold (put), if an option is exercised.


For more information on Options read good book.

You can check list of option contracts available in NSE/NIFTY.