 In this section, I will explain the concept of options that are a type of financial instrument and what we will be discussing that what is meant by an option and why we can say that this can be used as a tool for insurance. So, we discussed earlier that there are various ways through which we can protect ourselves from risk because whenever we are doing any kind of business or whenever we are undertaking any type of investments, making any type of investments, we get exposed to risk. So, there are a number of different techniques through which we can protect ourselves from the exposure to the risk. So, we cannot avoid it in some cases but somehow we can manage to protect ourselves from a higher level of risk. So, options is a financial instrument that is used or we invest or in options in order to protect ourselves from different types of risks. So, when we look at the concept of option, as I said earlier that it is a financial instrument that is basically based on the value of the underlying securities and there could be a number of different types of securities and we can take up the stock. So, what is going to be the value of a certain stock or the value of certain stocks which we are trying to invest in. So, the value of that stock will help us in determining the value of the option. So, basically option is a contract which allows you to or which gives buyers the opportunity to protect himself or herself against certain risks that can be there in future. So, basically the investors can buy options or they can sell options. So, and the basic objective behind both selling and buying options is to protect themselves against the risk therefore we can consider it as a tool that can be used as an insurance in order to protect ourselves or the investors can protect themselves against any kind of risks. So, if we look at the, we discussed earlier the concept of futures and now I am telling you about the concept of options. So, both are the various types of financial instruments. So, there is a technical difference between futures and options. So, there is a technical difference between futures and futures because when you are investing in futures, you are saying that on the future date, we will pay so much money for this particular financial instrument and after a month or after six months or after three months, this particular transaction will take place. This is what is meant by futures. But in the option, you are saying that it is not necessary that we will buy it. So, as the name says, option carry is that you have the option to do that particular financial activity. If you feel it is appropriate or suitable, then you can actualize the option or materialize it. But if you do not want it, then there is no obligation on you. You do not have any compulsion on you. So, that is the basic difference between options and futures that here you can go for it in case of options. But in futures, you will have to do for it. Go for it. Okay. You have to go to the futures. You do not have to sell or buy things that you have signed for the future contract. But in the option, you have the facility that you will buy this particular financial instrument or sell it if it suits you at that time. So, there is a provision of going for it or not going for it. Now, whenever we are talking about options, so there is always a premium that is there defined when we are talking about selling or buying any types of options. So, options can be of two types, option ke do tarah hote hain, we can have call option and we can have put option. Call option ka matlab hote hain ke aap kisi financial asset ko buy karna chaate at a certain stated price within a specific time frame. To aap ne ek certain time frame liya hain, it could be 90 days, it could be 30 days aur aap buy karna chaare hain koi bhi instrument, to iss ka matlab hain ke aap call option pe jaare hain. Agar aap put option ki baat karenge to iss ka matlab hain, you want to sell a financial instrument within the stipulated time period at a certain rate aur uski upar hain premium be defined karte hain depending upon the situation, to iss the basic difference, there are two types of options, ek call option hain, ek put option hain, put option mein aap bechte hain, call option mein aap kareete hain, I want to go for this particular financial instrument. Now, when we are talking about a call option, to call option ka matlab hain ke aap bhechna kareet na chaare hain koi bhi financial instrument ko, to waha pe iss call option mein ka hote hain ke jo buyer hain wo bullish hain aur jo seller hain wo bearish hain, iss ka matlab hain ke, for example, I want to go for call option, mujhe koi financial instrument option ke tor pe, a me commit kari ho ke mein esko leena chaati hoon, to it means I am going for call option, to being a buyer, I expect ke ye jo instrument mein iss keemat pe leer hoon, for example iss akati iss ki keemat 50 rupee hain, ek stock ki aur me expect karte hoon ke future mein, aat se 6 maa ke baat, ya chan maa ke baat, ya chan din ke baat iss ki keemat 50 rupee se baat jaayi gi, to jo buyer hote, call option mein wo hain me sia bullish hote hain, lekin jo seller aap zaira koi market mein bheche ka koi stock ko to hi mein kari chakti hoon, toh sre wo aadmi bheche ga, jo ke samaj raha hain ke future mein iss particular financial instrument ki keemat girne wali, iss ka matlab hain ki yaha, in case of call option, the seller will always be a bearish seller, wo expect kare hain ke market mein keemat girne wali hain, aur jo kharidahar hain wo expect kare hain ke market mein keemat bharne wali hain, aur ja wo bhar jaayi gi toh phir mujhe fayda hoega, this is what I am thinking, this is what I am foreseeing, hence I am interested in buying a financial instrument, aur iss situation mein jo seller hain wo bearish hain, jo buyer hain wo bullish hain, on the contrary, if we are talking about the put option to wo hain pe situation thodi sih farak ho jaayi gi, right, so we are going to discuss it in a while, but when we are talking about the fixed price on which the option contract will be signed ke ye keemat ke upar hum koi bhi option ko kharidne jaayi aur bechne jaayi, woist particular keemat ko hum strike price jaa exercise price bolte hain, so now there are two different categories ke humare paas options mein, we can classify the option as a european type option and american type option, abin dorono mein far kya hota, so if an option can be exercised upon the expiration date only, because jyasi humne shuruma discuss keya ke there would be a certain specified time period, made date ne bolri, time period huta hain in case of option ke aap iss particular time period ke dharan ya time period ke expire hone par aap ye particular cheez ko financial instruments ko kharid sakte hain ya bech sakte hain, sakte hain ka matlab hain aap ke paas choice hain, ki kya aap kharidne gay will be futures, to option mein aap kharid sakte hain aap ko choice mil re hain, right, now there are a number of financial institutions which are specialized in buying and selling the call and put options, jo options mein hi excel karte option mein deal karte hain, unka kaam ye hai, right, but at the same time there could be a number of investors jo ke futures mein invest karte hain, options mein hi jaate aur basic technical difference dono ka ye hai ke futures mein confirm hai ke aap ko wo kharina hi hai, options mein aap ke paas choice hain aap kharid sakte hain ya, nahi kharid sakte depending upon the market situation, now if you are bound to go for an option again choice hai, agar aap expiry date ke upar hi siraf apni choice ko exercise kar sakte hain to aapki option European type option kehlai gi, lekin agar aap us particular expiry time se pehle bhi agar is particular option ke right ko exercise kar sakte aap ke paas permission hai, allowance hai, to then the option will be categorized as an American type option, so whenever you go for an option, a call option or a put option, there has to be an expiry date, there has to be a strike price jiski jiski mat ke upar aap us particular financial instrument ko kharidne ki choice lene jaare right aur agar aap expiry date ke upar hi siraf us choice ko exercise kharin ge to aap European type option kehlai gi, agar aap expiry date se ishi bhi vakt pehle bhi aur expiry date tak aap ke paas option open hai ki aap apni option ko exercise khar sakte hain to then you are undertaking you have purchased or you have gone for an American type option.