Option is a derivative security and derives its value from an underlying security asset. An option an instrument that provides to its holders an opportunity to purchase sell a specified security at a stated price on before a specified expiration date. The focus in options is on options ed to shares. They are traded in India on the NSE and the BSE as securities. There are three forms of options: (i) rights (ii) warrants, and (iii) calls and puts. While rights are discussed in warrants are described and illustrated in the preceding section. This section explains all and put option As an investment vehicle, however, they are not a source of financing. They are issued by investors and not by firms. They are used to earn a return or to protect lock-in returns already earned on securities by fund managers. But they do stabilize market prices of by increasing trading activity in them. Unlike shareholders, buyers of option have no voting . The finance managers do not deal with them as a part of fund-raising activities.

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