Call option
The right, but not the duty, to buy an index or share at a set price (the strike) on or before expiry. You pay a premium for it.
A call gains value when the price of the underlying rises above the strike. If it stays below, the call expires worthless and the buyer loses the premium, which is the most a buyer can lose. The seller collects the premium and takes on the obligation, and can lose a great deal if the price jumps.
Your break-even at expiry is the strike plus the premium you paid. Options also lose value as time passes, so a call can lose money even when the index goes nowhere.
Example
With the Nifty at 25,000 you buy a 25,200 call for a premium of 100 points. One lot of 65 costs 6,500 rupees and your break-even is 25,300. If the Nifty ends at 25,500, the call is worth 300 points, or 19,500 rupees, a profit of 13,000.
Watch out
Index options in India expire weekly or monthly. A cheap call that needs a big move within a few days usually expires worthless.
Learn it properly in
Chapter 1.1: Futures and options in India: how F&O actually works, and why nine in ten retail traders lose