Options are financial contracts that give the buyer the right, but not the obligation, to buy or sell an asset at a fixed price on or before a specific date.
Options are a type of derivative used for hedging risk and speculation. Unlike futures, options give flexibility because the buyer is not required to execute the contract.
Options are traded on exchanges like the National Stock Exchange and Bombay Stock Exchange, regulated by the Securities and Exchange Board of India.
"An investor buys a call option for a stock at ₹100. If the price rises to ₹120, they can buy at ₹100 and profit."