 In this section, I will explain the concept of index options. So, options can be of commodities, options को अंदर आब, metals को भी फलीद और फरोट कर सकते है, बगर वो options जिन में जो रेट है, प्रैस है, उसका तायुन, stock market के, indicators को मदेनजर रहके किया जाता है, या कि में आई तब तब उसको नहीं को, अज बेंच माग लगती के इस पतिकलर अप्श्टन से अव्रह्त्ते है, उसको वो लेड विश्टन बाहना के लगती है, तो यह इस वो अप्टन से नहीं को वो देनजर रहुता है. यह यह बच्टन और उसको है, अपना बज़ाई थे आपको मरगेभिया है। आपको मचोरटी लेड प्डेले है। उसको हम कै आमरकंट डएए अप्शोंस उसको वहाँ वोता है। मचोरटी डेट के आपको मचोरटी च्छ़े पेले आपकिसी भी वकत उसको जागे एकसेशाओच़ते है। अगर जो भी आख़ें लेए भीलेबल है सिथौएशिन अख़टिरेशन आप एकशीश कर सकते है अरपीं स्थार अपष्टन आपको निटग देट का अपष्टन को अप्टिरेशन करने के लिया ये पतिक्लर ट्रान्ट्ख्छन कनने में नुख्साण हुता है, तो वो कभी भी एसी की ट्रान्ट्ख्छन अप्शिन अख्सिसाँइज नहीं करतां। असे के situation में आप सोच रहोंगे के जब call option वाला है, investor है, उसने अगर option exercise नहीं की maturity date के अपर, तो जो offer करा था seller अपने financial instruments को उसको तो नुक्सान पूझगजाएगा, but there is an important thing, उसको पहदा का से पूछते है, अगर exercise नहीं हूँ आप maturity date के अपर option, तो जब आप आप ने contract साईं की आप आप ने कुच फीपे की होती है, जो बन्दा जो party याग जो company या जो individual जो investor आप ने financial instrument को बेचने चाता है, उस पतिकलर individual के साजब आप option को contract के contract को साइं करते है, तो आप कुच फीपे करते है, अगर आप maturity date के उपर आप ने call option लिया है, आप आप ने maturity date के उपर जाके उस को complete नहीं किया, exercise नहीं किया, तो in that case, जो offerer है, उस पतिकलर instrument का, जो के put option जिस नहीं थी, उस पतिकलर individual को फाइदा क्या पूछेगा के वो आप की जो उस नहीं अप आप ने उस के साजब ये contract साइं करने किसी के वका जोफी पे की ती, वो उस के अपने बास रख रख लेगा, और वो उस का profit बन जेगा. So these are the few important things that we need to understand. I am going to further explain this concept of index options using an example. Suppose we are taking an example that our benchmark index here is standard and poor is 500. In Pakistan, we use KSE 100 or KMI 30 to see the fluctuations of stock market or Sharia compliant companies. To see those things, we see KSE 100 index in local Pakistan. But when you go to the international market, there is a very big standard that is standard and poor is 500 index. So in the example, we consider the standard and poor 500 index as a benchmark in this example. And we saw that the standard and poor 500 is present at 4500 points. There are two people. One is Jain and the other is Tim. Jain decides to sell a call option to Tim with a strike price of 4500. So Jain wants to sell a call option to Tim. I told you that if we take any index as a standard for call option or put option as a benchmark, in such a situation, we call the index option. So as I just told you, suppose one fine day Jain said that he wants to sell a call option to Tim. And the strike price on it was 4500. Again, to decide this thing, he has kept this standard as a benchmark. Now Tim pays $10 premium. And when we take options, the unit used in it is usually, most of the times, in Pakistan, there is a unit of 100 units or 100 shares. You cannot take one share. You buy 100 shares, 200 shares, 300 shares, multiple of 100 shares. Or you invest in them. Now Tim pays $10 premium and calls the option that he will go for that. So what happened is that Tim had to pay $10 premium to do this. And total 100, suppose we said that he has bought stocks, he pays $1000 for Jain. Now if they decide that on a certain time period, like I told you that maturity date, we will have to decide or we will have to decide the price of this option before we signature it. So then there should be these two things that are, that should be known to the two parties who are signing this contract of option. So now we said suppose after a certain time period, standard and poor 500, it was sitting on 4500 at the initial level. Its value has increased. So by doing this, the call option of Tim will increase its price. And if the S&P 500 value goes down, then obviously the call option of Tim will go down. So again what we are trying to say is that the price of this call option is dependent upon a certain index which has been considered as the benchmark. So in the options in which you use any index as a benchmark, we call these options as index options. Now if the price of the stock market has fallen, the index value has fallen, then by doing this the price will go down. But if it goes up, then the call option of this particular call option that Tim has taken, its price will go up. Now we are assuming suppose it goes up to from 4500 to 4525. So you remember that we had taken 100 shares. So the difference between the two was 4500. And now the value of the index has gone up to 4525. So we took out the difference. And which is 25, and we took it from 100 because it was for 100 stocks. To take the call option, it was written in it. So now if the 25 will multiply it from 100, then if it exercises 4525 index value, then it will benefit from the $2500. Now if when Tim chooses to exercise his option, exercise his option means that you have taken a contract by signing it. And you have written in it in your Raza Mandi Zahir contract that I would like to take it at this price on a certain date. You did not say I will take it. So in that case, that is why we are saying this contract is the option contract. So because you are using an option, it is an option. It is not an obligation on you. So now if Tim says that I want to exercise it, I have really signed this contract that I will buy these 100 shares at this price. So if he exercises it, then in that case, Jane and Tim will exchange money to settle the contract. However, if they are exercising the option, then Tim is getting a loss. As I just told you that it was the index of $2500. And now it has gone from $2500 to $4200. So in that case, if Tim gets a loss, then Tim will not exercise such an option. But if the index value goes up, then in that case, he will exercise the option. And by doing this, like I just took the numbers, suppose it was $4500, now it has gone up to $4500-$2500. And the source signed a contract to buy the shares. So if the index value goes up to $4500-$2500, then it will become a profit of $2500. So this is how you can earn or make money, earn profit or make money if through the index options or through the various different other types of options by offering a port option or a call option.