Basics of Futures and Options

A spot market is where the stocks are traded immediately or on spot.Derivative market is the financial market derivatives like futures and options.We require a certain margin amount to trade in futures. An option contract gives the buyer the rights, but not the obligation to buy(sell) a certain asset during the life of contract. A future contract gives the buyer the obligation to buy and the seller to sell until the holders position is closed prior to expiry date.Futures and options offer significant leverage over the underlying asset and the ability to make large profit through small investment.