In Futures and Options market is the deal will be executed later while in the Spot market the settlement happens in the same day. In Spot market the buyer buys the equity, while in the future the buyer buys the rights to buy. In the Future market, the buyer and seller makes contract which shall be executed at the expiry date. the difference between the executed price and the market price is the profit that a buyer or seller would make.
- : Spot market or cash market is the market where equity is traded and settlement happens on the end of the day.
- : In futures market, exchange will maintain refundable margin from both the parties ,and manages the trade. In options it deals with the premium for the deal and executes it.
- : Margin - caution deposit given to the exchange. MTM - It is the day to day price fluctuations benificial or pay to the exchange and has to be realised in money. Premium - It is the amount given to the seller to sign the contract Strike price - It is the price in which the deals is done in future contract. Expiry Date - Expiry date or Maturity date is the date of settlement in the future market. Lot size: It is the minimum standardized quantity to stocks per contract.
- : In Options market, the buyer / seller gets the rights to buy / sell but does not have any obligations. On the other hand, In furture market, the buyer / seller gets the rights to buy/sell and obligations.
- : Call Option: when a trader believes that the price of the stock may go up, he goes for Call Option. Put Option: If the trader believes that the price of the stock will decrease, then he goes for put Option. Premium is decided by the exchange.
- : Futures contract is an agreement between the buyer and Seller where the seller agrees to sell the stocks at a future date with the strike price agreed between the buyer and seller.
- : A Trader needs Future /Call / Put because he can be active with minimum amount or premium
- : It is possible to trade NIFTY. With Futures contract one can trade NIFTY.
- : Physical settlement means settlement of commodity or stocks on the contract expiry date. Cash settlement means only the differential amount will be settled.