Stock Options are derivative contracts that give the holder the right but not the obligation to buy or sell the underlying share at a pre-agreed price and time. Options are of two types: call & put. A call option is the right to buy a stock while a put option is the right to sell a stock.

Options trading consists of two primary components: call and put. A call option gives you the right to buy a stock while a put option gives you the right to sell a stock. These are further divided into 4 more options:

• Buying a call option
• Selling a call option
• Buying a put option
• Selling a put option

You do not need a Demat account for trading options because there is no delivery of shares involved. All you need is an options trading account that you can open online with a broker.

Here’s how you can open an options trading account for free on Dhan:

• Download the app
• Enter Mobile Number
• Set a password & PIN
• Begin KYC
• Get KYC approved

Yes, options trading is legal in India and has been an active segment since 2001. However, SEBI has allowed options trading on a set of stocks that meet its guidelines. Currently, options contracts are available on 198 securities on the Indian market.

Options trading became an active segment in 2001. Initially, it was open for index options only but was later extended to individual securities in the same year.

Trading options is possible between 9 AM to 3.30 PM in India. Furthermore, you can set up a cutoff time or modify your positions by 4.15 PM.

A powerful stock brokerage account like the ones Dhan gives you access to can help you trade options seamlessly with modern features like:

• Pre-built option strategies
• Live market scan
• Deep OTM / ITM options
• Instant margin benefit

Options trading is not allowed on all stocks in India. There are only 198 securities eligible for options trading as per SEBI’s guidelines.