NISM Series XVI - Commodity Derivatives Exam Notes

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  • Buyer of an option is one who has a right but not the obligation in the contract. For owning this right, he pays a price to the seller of this right called 'option premium' to the option seller.
  • Writer of an option is one who receives the option premium and is thereby obliged to sell/buy the asset if the buyer of option exercises his right.
  • American option buyer can exercise his right at any time on or before the expiry date/day of the contract.
  • European option Buyer can exercise his right only on the expiry date/day of the contract.
  • Only European style commodity options are available in Indian derivatives exchanges.
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NISM Commodity Derivatives

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