In Futures contract we need not have entire money to trade but we must give some amount as margin which is a caution deposit to the exchange so that no one default at the end. The strike price is fixed buyers get benefited when price gets above the strike price and sellers gets benefited when price gets below and it all done every day through MTM process.
In option contract the whether it is a call option or put option it is meant to benefit buyers where sellers gets only premium.
Margin= It is the caution deposit given to the exchange in futures.
MTM= It is the abbreviation of mark to money. it sis the settlement process done on a day to day basis by exchange when price moves above or below the strike price. it has to be realized in money.
Premium= It is an amount given to option sellers where it is only beneficiary to buyers.
Strike price= It is the price where the derivatives are contracted.
Expiry date= The date when the derivatives are executed.
Lot size= In futures and options the trade cannot be made for single share it has to be trade in bulk quantity.
Basics of futures and options
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