Stock Broking
Options Contract
Pay a premium for the right (not obligation) to buy/sell.
An option buyer pays premium for the right to buy (call) or sell (put) at the strike price before expiry; the seller collects premium but takes the obligation. Buyers face limited loss (premium) with unlimited upside; sellers earn steady premium but risk large moves. Time decay (theta) erodes buyer value daily.
Example
Buy a Nifty 24,000 call for ₹150 premium: max loss ₹150×lot size; profit grows with every point above 24,150.