All the options that have an index as underlying are known as Index Options. The two most basic and popular index options are Call Option and Put Option. In the Indian options market, it is the index options that are a lot more popular and liquid. Just as a stock is an option on a stock, the index option is an option on a well accepted index like the Nifty, Sensex, Bank Nifty, etc. What are index options and how do they work. Apart from the index options definition, let us also look at what is index options conceptually.