Introduction to Options - An option contract is an agreement between two parties to buy/sell an asset at a fixed price and fixed date in the future. The buyer of the option always enjoys the right, and not the obligation, to execute the contract. He pays premium for acquiring this right. The seller of the option always incurs the obligation to fulfil the transaction if so requested by the buyer. He receives the premium to fulfil this obligation. Options are of two types:

  • Call Option
  • Put Option