What is an option?
An option is a derivative contract that gives the buyer the right, but not the obligation, to buy or sell an underlying stock or index at a set price within a set time, for a premium paid upfront. A call option is the right to buy; a put option is the right to sell.
Key terms to know
A few terms come up constantly:
- Strike price — the price at which the option can be exercised.
- Premium — what the buyer pays the seller for the contract.
- Expiry — the date the contract settles (weekly or monthly for index options).
- Lot size — options trade in fixed lots set by the exchange, not single shares.
- In/out of the money — whether exercising the option would currently be profitable.
The risks — read this first
Options are leveraged and can expire worthless. Option buyers can lose the entire premium; option sellers can face very large, even unlimited, losses and must maintain margin. Studies by the regulator show most individual F&O traders lose money. Trade only with risk capital you can afford to lose, after you understand the product — and read our Risk Disclosure.
Tools that help
A live option chain with greeks (delta, theta, implied volatility) and open interest helps you read an option’s price and risk before you trade. ROAR provides these on its F&O platform, along with live margin and smart orders to manage risk.
Frequently asked questions
Is options trading good for beginners?
Options are complex and leveraged, and most individual traders lose money. Beginners should first learn the product thoroughly, start very small with defined-risk strategies, and only use risk capital.
What is the difference between a call and a put?
A call option is the right to buy the underlying at the strike price; a put option is the right to sell it. Buyers pay a premium for these rights.
Can I lose more than I invest in options?
As an option buyer, your loss is limited to the premium paid. As an option seller, losses can be much larger than the premium received, which is why selling requires margin and care.
What do I need to trade F&O?
A trading account with the derivatives segment activated — this usually requires submitting income proof per exchange norms.