All about Options Trading

What is Option?

An option is a type of derivative instrument that involves a contract between two parties to buy or sell something on a future date, at predetermined prices. The contract gives the right, but not the obligation, to the buyer of the option, to buy/sell an underlying asset.

How to do Options Trading?

There are two types of options- Call option and Put option.

• What is Call Option?

The call option gives the right, but not an obligation, to the buyer of the contract to buy an underlying asset at a predetermined price (known as strike price), on the contract expiration date. The buyer typically exercises the call option when the market goes above the strike price.

• What is Put Option?

The put option gives the right, but not the obligation, to the buyer of the contract to sell an underlying asset at a predetermined price (known as strike price), on the contract expiration date. The owner usually exercises the put option when the market moves below the strike price.

Options Trading Benefits

• Less risky than future trading for an option buyer.
• Helps you to hedge your open position.
• Less margin required for Option buyers, who need to pay only premium as an up-front margin.

Who can trade in Options?

Options trading is open to all new and existing ICICIdirect trading account holders.

How can I trade in Options?

Login to ICICIdirect>F&O>Place your order.