Options, Call & Put options, futures
Option – the right to buy or sell a futures contract at a particular price. The right to buy a futures contract is called a Call Option. The right to sell a futures contract is called a Put Option. The price chosen for which to buy or sell is called the Strike Price. The price paid for the right is called the Option Premium. Example of Call option order: Buy one contract November wheat call - €250 strike at €15 premium. Call Option A contract which gives the purchaser the right, though not the obligation, to purchase the underlying security at a specific price within a specific time frame Suppose the Infosys is currently trading at INR 900. A trader thinks that the current price of Infosys is undervalued and expected to increase in the future. In this case, he buys the call option of Infosys and pays a premium to the call seller. Suppose the price of Infosys increases to INR 1000 at expiry. Then the buyer will exercise the option since he has the right to exercise. ...