The spot market or cash market is a financial market in which financial instruments or commodities are traded for immediate delivery. The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options. Derivative exchange is a place where the individuals trade standardized contracts defined by the exchange
Margin trading is where investors buy more stocks than they can actually afford. For this purpose, the broker would lend the money to buy shares and keep them as collateral.
MTM is an accounting method that marks the price of the asset to the current market price
The price at which the sale takes place is known as the strike price, and is specified at the time the parties enter into the option.
The expiry date(India) is the last working Thursday of the month when the contract expires.
Lot Size – In options trading, lot size represents the total number of contracts contained in one derivative security
Difference between option contract and future contract lies in the obligation.
An option gives the buyer the right, but not the obligation to buy (or sell) a certain asset at a specific price at any time during the life of the contract.
A futures contract gives the buyer the obligation to purchase a specific asset, and the seller to sell and deliver that asset at a specific future date, unless the holder’s position is closed prior to expiration.
NIFTY trading can be done in the derivative markets. For Nifty futures contracts, the permitted lot size is 50, and in multiples of 50. Investors can trade in Nifty futures by having a margin amount in their account.
