Match the List-I with List-II:

LIST I Derivative type	LIST II Their Explanation
A. Call Option	I. An agreement to buy or sell an asset on a specific date for a specified price, settlement happens at the end of the period.
B. Put option	II. An agreement between two parties to buy or sell an asset at a certain time in future at certain price, through standardized contracts and traded through stock exchange.
C. Future Contract	III. A contract that gives the holder the right but not the obligation to buy specified securities at a specified exercise date.
D. Forward Contract	IV. A contract that gives the holder the right but not the obligation to sell securities on or by a certain date at a fixed exercise price.

Choose the correct answer from the options given below:​

Correct option is D

A. Call Option → III​
A Call Option gives the holder the right, but not the obligation, to buy securities at a specified price (exercise price) on or before a specified date.

B. Put Option → IV
A Put Option gives the holder the right, but not the obligation, to sell securities at a specified price (exercise price) on or before a specified date.

C. Future Contract → II
A Future Contract is a standardized agreement between two parties to buy or sell an asset at a certain price on a future date. These are traded on stock exchanges.

D. Forward Contract → I
A Forward Contract is a customized agreement to buy or sell an asset at a specific price on a future date. Unlike futures, these are over-the-counter (OTC) agreements.

Information Booster:

1. Call Option (A-III):

   • Definition: A financial derivative giving the holder the right to buy an asset.
   • Example: If you expect the price of a stock to rise, you can purchase a call option to lock in a lower purchase price.
   • No Obligation: If the market price doesn’t rise, the buyer can simply let the option expire.

2. Put Option (B-IV):

   • Definition: A financial derivative giving the holder the right to sell an asset.
   • Example: Investors expecting a price decline use put options as protection or for speculation.

3. Future Contract (C-II):

   • Definition: A standardized agreement traded on exchanges, obligating parties to buy or sell assets at a specific future date and price.
   • Settlement: Futures can be settled through physical delivery or cash settlement.

4. Forward Contract (D-I):

   • Definition: A private, customizable contract to buy or sell an asset at a future date at a predetermined price.
   • Key Feature: Forwards are not traded on exchanges and carry counterparty risk.