Basics of Options Trading FAQs

What does Index Options mean ?

Index Options are options contracts in which the underlying is an Index, e.g. Nifty 50 and S&P BSE-Sensex. Each option of an index is a collection of stocks that are based on a particular theme. The weight of each stock is what determines the price of an index.

Index Options come in different lot sizes, strike prices, and expiry dates. Each index option has a 3-month expiry cycle, which includes 1, 2, and 3 months.

Index Options Benefits

There are many benefits to investing in index options, including:

  • Offers greater exposure through a single trade
  • Diversification leads to better risk management
  • Trading costs and risk are lower
  • Trades with lower volatility

Index Options in India

  • Options for Nifty 50 Index Options
  • NSE Bank Nifty Index Options
  • NIFTY IT Index options
  • NIFTY Infra Index options
  • NIFTY PSE Index options
  • NIFTY MID50 Index Options
  • Options for the FTSE 100 Index
  • S&P BSE SENSEX Index Options

What is the work of Options ?

How many types of Options ?

What is strike price of option ?

When does Options expire?

What is the process for trading options ?

How futures and Options are different ?

How Nifty can be traded ?

What will happen when an option expires out of money ?

Do I have to pay margin in Options ?

How can the Options contracts be settled ?

What do you mean by Covered Options ?

When do you mean by Naked Options ?

What does American Options refers to ?

What does European option mean? ?

In Options , What is the meaning of At-The-Money , Out-of-the-Money (OTM) and In-The-Money ?

How to take decision on either to buy /sell call Option or put Option ?

Is it possible to trade on option of any stock or index?

How Square off and exercise an Option is different ?

What does intrinsic value of an option mean and how to calculate intrinsic value of an option ?

What does time value of an Option mean ?