What is Options?
An option is a contract giving the buyer the right to buy (call option) or sell (put option) an underlying asset at a specified price (strike) by a specified date (expiration). Buyers pay a premium; sellers (writers) receive premium and take on obligation. Major exchanges: CBOE (US), NSE (India F&O is one of the world's largest derivatives markets by volume). Options enable hedging, speculation, income generation, and complex strategies.
Why it matters for investors
Options markets generate signals about expected volatility (implied volatility, VIX), directional bias (put/call ratios), and large-trader positioning. India's retail F&O explosion (Indian retail traders are now among the world's most active options traders) has reshaped market microstructure and prompted SEBI scrutiny. Zero-day-to-expiry (0DTE) options have similarly grown in US.