Spot market – Immediate delivery of assets
Futures market – Will signed a contract and delivery will happen on future
Margin – Cause and deposit amount to be paid to brokers for trading in futures, options
MTM – Mark to Market, which records the assets to the current market price
Premium – Amount to be paid to the sellers in options trading
Expiry Date – It’s the maturity date for contracts
Lot size – Number of shares in the contract
Option – Buyers only have the right to sell the contract. Maximum loss for the buyers is the premium amount
Option types: –
Call option – Buyers makes a profit when the price goes above the strike price
Put option – Buyers makes a profit when the price goes below the strike price
Future contract – A contract signed for the agreed price, and settlement and delivery happen in the future. Both buyers and sellers have the right to sell contracts at any time.
