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: shares. In case of Nifty it is 50 shares. A mini nifty option contract started by BSE and NSE has a size of 20 shares in a lot, especially for small investors. There are different terminologies used in options like strike price, premium, expiry date, settlement period, intrinsic value and time value. A strike price is the price at which the buyer of the option wants to exercise the contract on the day of expiry i.e., on the last Thursday of every month. A strike price is also known as exercise price.

A strike rate is said to be in the money when the spot price is higher than the call option strike price. Out of the money is when the call option strike price is higher than the spot price. And at the money is where both the strike price and call option is equal. The same thing can be explained exactly in an opposite manner in put option. When a strike price is in the money, the premium can be divided into two parts, intrinsic value and time value of money. Suppose the Nifty spot price is 5,200 and 5,000 is the strike price, and it has a premium of Rs 250, then Rs 200 is intrinsic value and Rs 50 is time value. There is only time value premium and zero intrinsic value in case of out of the money. Premium is the amount you have to pay when you buy option contract having a specific strike price. The premium varies depending upon the difference between strike price and spot price and time value. Also, there are some terms like in the money, out of the money and at the money. In option contract you will find different strike rates. Currently, you will find 11 strike rates in case of Nifty options. Five are out of the money one is at the money and remaining five are in the money contracts.