InvestorQ : Has the growth of options and futures been rapid in India?
Jignesh Gupta made post

Has the growth of options and futures been rapid in India?

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Maniish Lofar answered.
2 years ago
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The market for futures and options were first introduced in India in 2001. But that was the formal market. Options and futures have existed in an information manner for more than 100 years but they were over the counter products. It is only from 2001 that exchange traded futures and options were introduced in India. One market that has really developed rapidly in the last few years is the Options market. Options represent a right to buy or sell an asset without the responsibility. A right to buy is referred to as a call option while a right to sell is called a put option. So typically, when I expect markets to go up, I will buy a call option and when I expect the markets to go down I will buy a put option.

Remember, in options there is a subtle difference between the buyer and the seller of an option. The buyer has the right but no responsibility, while the seller of the option has the responsibility but not the right. The maximum profits in case of an option buyer can be unlimited but the maximum loss will be limited to the option premium paid. On the other hand, in case of an option seller the maximum profit will be limited to the premium received but the maximum loss will be unlimited. It is this interaction between the buyers and sellers of options that actually creates an options market.
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