Future and option contract understanding

Derivative instrument are risk management tools and can be used for speculation as well. Future, options and forward contracts are types of derivative instrument. Stock exchange provide the platform for derivative trading in stock, currency, commodity, indices etc. NSCCL carrries out the clearing and settlement.money, MTM margin settlement etc. Future contract is buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future. Whereas option contract where buyer of option contract hold right to exercise contract and not obligation to exercise it. There are two types of option Call (buy) and put (sell).