An Option is a derivative contract that gives you the right, but not the obligation, to buy or sell an underlying asset (like Nifty or a specific stock) at a fixed price within a specific time frame.
Think of it like paying a small fee (Premium) to "lock in" a price, similar to how an insurance premium works.
1. The Two Types of Options
In India, these are labeled as CE (Call European) and PE (Put European).