The spot market or cash market is a public financial market in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market, in which delivery is due at a later date. Margin : A margin is collateral that the holder of a financial instrument has to deposit to cover some or all of the the credit risk of their counter party ( broker/exchange)
MTM : It is the abbreviation of Marked to Market. The positions in the futures contracts for each member is marked-to-market to the daily settlement price of the futures contracts at the end of each trade day.
Premium : It is money paid by the option buyer to buy either call/put option. The seller of the option contract collects the premium to sell the rights to the buyer of the call/put option.
Strike Price : The strike price is defined as the price at which the holder of an option contract can buy (call option) or sell (Put option) of the underlying asset when the option is exercised.
Expiry Date : It is the last day that an options or future contract
There are two types of settlements for futures contract: cash settlement and physical delivery.
Cash settlement is a settlement method used in certain futures contracts where you don’t have to make or take delivery of the underlying asset at the expiration of the futures contract. Instead, your account is either debited or credited with cash.
Physical delivery is a settlement method where you have to make or take delivery of the underlying asset at the expiration of the futures contract. Typically physical delivery is specified in futures contract where the underlying asset is a physical commodity.
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