InvestorQ : What is the basic essence of a call options in the F&O market?
prachi Patwardhan made post

What is the basic essence of a call options in the F&O market?

Answer
user profile image
2 years ago


This is the most basic feature of a call option. The buyer of the call option gets a right to buy a stock or the index without the obligation. On the other hand, the seller of the call option has the obligation to sell the stock or the index without the right. For getting this right without the obligation the buyer of the option pays an option premium (option price) to the seller of the option. When you trade these options you are basically trading in these rights. When the price of SBI is Rs.250 then a call option with a strike price of Rs.255 may be available for Rs.3. This Rs.3 represents the value of the right for the buyer of the option.