Final answer:
Equity options and index options result in financial transactions through buying or selling options contracts.
Step-by-step explanation:
Equity options and index options are financial derivatives that give investors the right to buy or sell shares of stock or an index at a specified price within a specific timeframe. This results in financial transactions in the form of buying or selling options contracts.
For example, if an investor purchases a call option on a stock, it gives them the right to buy the stock at a predetermined price (strike price) within a specified period. If the stock price increases, the investor can exercise the option and buy the stock at a lower price, profiting from the difference.
Similarly, if an investor sells a put option on an index, it gives them the obligation to buy the index at a predetermined price if the index falls below that price. If the index remains above the strike price, the option expires worthless, and the investor keeps the premium received from selling the option.