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.
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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.
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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.
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