Introduction to Options

22 marks (15%)~9 hours study17 sections · 16 practice questions

Learning objectives

Define a call and put option, distinguishing buyer and writer.
Draw payoff and P&L diagrams at expiry for the four basic option positions.
Identify the determinants of option price (intrinsic vs time value).
Apply Black-Scholes thinking to call/put pricing (conceptually).
Compute and interpret option Greeks — delta, gamma, theta, vega, rho.

Topics covered

01Call and put options — rights and obligations

02Option premium components — intrinsic and time value

03Payoff diagrams — long call, short call, long put, short put

04Option pricing — Black-Scholes intuition

05Implied volatility

06Option Greeks — delta, gamma, theta, vega, rho

07Moneyness — ITM, ATM, OTM

Sign up free to unlock this chapter

Chapter 1 (Basics of Derivatives) is free to read. Chapters 2 through 10 — plus all 120+ practice MCQs and the 6-week study plan — unlock with a free Academy account. No payment, no credit card.

A peek at what's inside Chapter 5:

study sections

First section: "Why this chapter matters"

cheat-sheet terms

Includes: Call, Put, Writer / seller...

practice MCQs

Interactive — click an option to reveal the correct answer + explanation

3 underlying tabs

Equity / Currency / Interest Rate views

Create student ID Sign in

Free forever. We don't sell your data. No credit card needed.

Want to sample the format first?

Read Chapter 1 free (no signup needed)

Academy/NISM Series XIII/Chapter 5

Chapter 5 of 10