Key Characteristics and Benefits

• American Exercise Style: Indian stock options generally conform to the American exercise style, where an option holder is able to exercise the option (to buy or sell shares at the strike price) at any time up to and including the expiry date, as opposed to European-style options which can be exercised only on the expiry date.
• Standardized Contracts: For orderly trading, stock option contracts are standardized on exchanges. These are fixed Lot Sizes (a fixed number of shares per contract), pre-specified Strike Prices at regular intervals, and specified Expiration Dates, typically in monthly cycles (Near, Mid, and Far months).
•Settlement Mechanism: Although early exercise of American-style stock options may entail physical delivery of the underlying shares, options that are carried to expiry are typically cash-settled. For in-the-money options at expiry, settlement is the cash difference between the final settlement price (typically the closing stock price) and the strike price.