Options are divided into two types: Call and Put. A Call Option gives the holder the right to buy an asset at a fixed price within a set time, while a Put Option gives the right to sell. Traders use Call options when bullish and Put options when bearish. Each contract has components: strike price, premium, expiry, and lot size. Buying options is a limited-risk, high-reward strategy, while selling options provides steady income but involves significant risk. For example, if a stock is trading at ₹100, a trader may buy a Call Option at ₹105 strike, paying a premium of ₹2. If the stock rises to ₹110, the profit is ₹3 (₹110 - ₹105 - ₹2). Similarly, buying a Put at ₹95 strike would be profitable if the stock falls below ₹93. Understanding time decay, volatility, and option Greeks is crucial for effective option trading.