What are the different types of Options Contracts? What is CE and PE?

There are two main types of options contracts: Call Options (CE) and Put Options (PE). Both give the buyer the right, but not the obligation, to buy or sell an asset at a pre-defined or fixed price (strike price) on or before a specified date (expiry).

Call Option (CE) – Give you the right to buy the asset at the strike price. As a trader, you would buy the Call Option when you believe that the price of the underlying asset will increase.

Example: Suppose the current price of Nifty 50 is 23512 and you expect it to rise further, you would buy the Nifty 50 Call Option of strike price 23500. This would mean that even when the price goes up, you would have the right to buy Nifty50 at 23500.

Put Option (PE) – Give you the right to sell the asset at the strike price. As a trader, you would buy the Put Option when you believe that the price of the underlying asset will decrease.

Example: Suppose the current price of Reliance Industries Limited is ₹2,820 and you expect it to fall further, you would buy the Reliance Put Option of strike price ₹2,800. This would mean that even when the price drops, you would have the right to sell Reliance at ₹2,800.