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Options are of two types  Call Options and Put Options
You buy a call option on TCS for October at the strike price Rs 2000 at a premium of Rs 200 for a lot size of 100 shares. This gives you the right to buy 100 shares of TCS at Rs 2000 anytime from now until the end of October. To earn this right, you pay a premium of 100 X Rs 200 shares= Rs 20,000. Now, if the price of the option at any time before expiry is higher than Rs 2100, then you may exercise the options and earn profits. Say the option price is Rs 2150. You will get
Rs 150 (Strike Price Market Price) X 200 shares= Rs 30,000.
Your profits will be Rs 30,000  Rs 20,000 = Rs 10,000.
In case, your option didn't do well in that period and remained below Rs 2000 then you can choose to opt out. In that case, you will only lose the premium amount of Rs 20,000.
You buy a Put option on TCS at the strike price of Rs 2000, at a premium of Rs 100 for a lot size of 100 shares. You pay a premium of Rs 100 X 100 = Rs 10000 while buying the option. If the Price of TCS option remains below, then you will earn profits by selling the option. However, if the stock price remains higher than strike price then you could choose not to exercise the right and will only lose the premium.
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