Delivering a talk on ‘Options market and trading strategies’ at an investor awareness programme organised by the Mangalore Chapter of the Institute of Company Secretaries of India (ICSI) at Karnataka Bank auditorium here on Saturday, Sharma said, “an option is a legal contract which gives the option-holder the right to buy or sell a specific amount of underlying asset at a fixed price within a specified period of time.” The ‘in the money option’ in the options market allows investors to buy shares at an agreed price within the specified period, even if the market price is more, he added.
Investors need not be anxious about option market since the provision under the scheme is legal, Sharma said. Similary, the National Stock Exchange (NSE) also gives guarantee to investors with regard to the assurances in the options market, he added.
Sharma said that while the investor has rights, a seller has obligations towards investors under the options market. An option seller should always be obliged sell or buy shares of underlying asset at a fixed price within the specified period of time, he added.
Options market do not force investors to buy shares under the scheme. At the same time, investors have the freedom to chose any other option too. Option holders can also chose long dated options, upto three years, wherein an investor need not renew the contract till the end of the specific period, Sharma explained.
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