Option basics · Lesson 09 of 9 · Concept
Lot size, expiry and settlement
An Indian option contract is defined by its underlying, strike, expiry and lot size. Index options such as NIFTY and SENSEX are cash-settled against the closing level. Stock options are settled by delivery, which makes an in-the-money contract at expiry an obligation to transact the shares themselves.
NSE and BSE contract specifications
One contract is a multiple, not a unit
Option prices are quoted per unit of the underlying, but contracts trade in lots. A premium of ₹64.50 on a NIFTY call is ₹64.50 multiplied by the lot size in effect for that contract, and the same multiple applies to every point of settlement.
Lot sizes are set by the exchange and revised periodically, so a figure memorised from one year misstates the rupee exposure in another. Every worked example across these lessons is quoted per unit for that reason; multiplying by the current lot size is the last step, not the first.
Cash settlement and delivery are different obligations
NIFTY and SENSEX options are cash-settled: at expiry the difference between strike and closing level is paid, and nothing changes hands beyond that. A buyer needs no capacity to deliver anything, and a writer needs no holding.
Stock options settle physically. An in-the-money stock option at expiry becomes an actual purchase or sale of the shares, with the full contract value due rather than the difference. That distinction is the subject of its own lesson in the Mechanics topic, because the cost of overlooking it is not proportional to the premium involved.
Common questions
Are NIFTY options cash-settled?
Yes. NIFTY and SENSEX index options are cash-settled against the closing level of the index at expiry — only the settlement difference is paid, and no securities change hands.
What is a lot size in options?
Lot size is the number of units of the underlying that one contract represents. Premiums and settlements are quoted per unit and multiplied by the lot size to give the rupee amount. Exchanges revise lot sizes periodically.
All 9 lessons in Option basics →
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How these figures are produced
Every price on these pages was traded on the exchange and is read from our own option-chain capture, which records the NIFTY and SENSEX chains once a minute through the session. Each page names the session its figures come from.
Figures that a model produced rather than the market — the Greeks, implied volatility — are labelled as model outputs wherever they appear, and never presented beside traded prices without saying which is which. The pricing is checked against published reference values on every change.
Where our own data cannot support a claim, the page says so instead of generalising. MarketCue is not a registered investment adviser, research analyst or broker under SEBI regulations.