About Options
An option contract goes one step beyond a futures contract, towards capping risks. These contracts give you the right but not the obligation to buy or sell shares or an index, at a specified price (strike price or exercise price), on or before a given date in future (expiration date). So, if you have purchased an option contract, you have the right to simply ignore the terms of the contract if the price of the underlying shares or index goes against you. Of course you have to pay a price, called a premium, for this privilege.

On the other side of this transaction, there is an option seller, also called the option writer. This trader gives you the right to buy or sell the underlying asset in exchange for the premium that you pay. He, himself, has no rights and is obligated to comply with the contract if you choose to exercise your option.

Remember that while the term 'writer of an option' is used to denote the seller of the option, there are no physical documents that are exchanged between the buyer and the seller of an option. All transactions are merely recorded by the stock exchange through which they are routed.

  Lot Sizes
  Expiration Dates
  Strike Price Intervals
  American and European Option
  Open Interest