There Spot Markets and Future Markets
Exchange facilitates settlement under Futures and options – this is also called derivative market.
Options and futures have concept of Margin, MTM and lot size
In future obligation to perform is mandatory.
In options the Buyer gets the right to buy or sell, without obligation during the contract period.
Derivative help in price discovery, as risk management tool to hedge risks and improves market efficiency of the underlying.
in futures and options it is possible to trade in indexes also.
Settlements can happen either by cash settlement or physical settlement
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