An option is a contract giving the buyer the right, but not the obligation, to buy or sell shares of an underlying security at a specific price on or before a certain date.

For example: Company ABC's shares trade at Rs. 60/- , and a call writer is looking to sell calls at Rs. 65 /- with a one-month expiration. If the share price appreciates to a price above Rs. 65/- , referred to as being in-the-money, the buyer calls the shares from the seller, purchasing them at Rs. 65/-

Click here to know more.