Call option is one where trader makes money if market price goes above strike price. In put option, buyer makes money if market price goes below strike price. Premium is decided by both buyer and seller of options.
Exchange plays major role in derivative instruments in terms of ensuring proper trading settlement between buyer and seller.
Margin-Collateral taken from trader account by broker for his future contract. MTM- Market to Market- to confirm daily settlement of difference in stock prices. Premium is known for options derivative market. Premium is decided by seller/buyer of option market. Strike price is price at which both buyer and seller enter into option contract. Expiry date is last date of any derivative contract. lot size is number of shares decided by exchange.
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