What Is an Options Contract? Types, Calls & Puts Explained

An options contract gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a “predetermined price”. This right can be exercised within or on a specified expiry date, depending on the option type.

Usually, the buyer pays a premium for this right. The “option seller” has an obligation if the buyer exercises the option according to the contract terms. If we talk about options trading basics in India, there are two primary types of options contracts:

Call Option	Put Option
The call option gives the “right to buy” and is usually purchased with a bullish intent.For example,Suppose Nifty is at 22,450.You buy a 22,500 Call for ₹100 (premium). If Nifty potentially goes to 22,700, your Call value goes up, and you make a profit. If it falls, you only lose the ₹100 premium.	The put option gives the “right to sell” and is usually purchased with a bearish intent.For example,Suppose Nifty is at 22,450.You buy a 22,400 Put for ₹100. If Nifty falls to 22,100, your Put value goes up, and you profit. If the market goes up, you only lose the premium.

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What is an Options Contract?

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