Part 10 Trade Like Institutions

What Are Options?

Options are derivative instruments—their value is derived from an underlying asset such as Nifty, Bank Nifty, stock, commodity, or currency.

An option is a contract that gives the trader:

Right, but not the obligation,

To buy or sell an underlying asset,

At a fixed price (Strike Price),

On or before a specific date (Expiry Date).

Because you have a choice, these instruments are called “Options.”