The spot market or cash market is a public financial market in which financial instruments or commodities are traded for immediate delivery. The exchange plays a major role in derivative instruments like futures and options. An option gives the buyer the right, but not the obligation, to buy (or sell) an 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. A call option gives the holder the right to buy a stock and a put option gives the holder the right to sell a stock. The seller gets the Premium amount for signing the call/put option contract, where the premium is traded between buyer and seller. Futures/ call/put options are required for traders to customize trading. In the derivative market, the entire stock price is not required and the only margin needs to be paid.

  • : The spot market or cash market is a public financial market in which financial instruments or commodities are traded for immediate delivery.
  • : The exchange plays a major role in derivative instruments like futures and options. Futures are standardized contracts that trade on an exchange. Traders use a futures contract to hedge their risk or speculate on the price of an underlying asset. The parties involved are obligated to fulfill a commitment to buy or sell the underlying asset. An option is nothing but an agreement between two parties to buy or sell an asset at a predetermined future date for a specific price.
  • : Margin money is like a security deposit or insurance against a possible future loss of value. Once the transaction is successfully settled, the margin money held by the exchange is adjusted against the settlement liability. Mark to market (MTM) is a method of measuring the fair value of accounts that can fluctuate over time, such as assets and liabilities Premium refers to the total cost to buy an option contract. A strike price is a set price at which a derivative contract can be bought or sold when it is exercised. For call options, the strike price is where the security can be bought by the option holder and for put options, the strike price is the price at which the security can be sold. The expiry date is the date on which a particular contract (usually a derivative contract) expires. On the expiry date, the derivative contract is finally settled between the buyer and seller. the lot size refers to the number of shares we buy in one transaction.
  • : An option gives the buyer the right, but not the obligation, to buy (or sell) an 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.
  • : A call option gives the holder the right to buy a stock and a put option gives the holder the right to sell a stock. The seller gets the Premium amount for signing the call/put option contract, where the premium is traded between buyer and seller.
  • : A futures contract is a legal agreement to buy or sell a particular commodity asset, or security at a predetermined price at a specified time in the future.
  • : Futures/ call/put options are required for traders to customize trading. In the derivative market, the entire stock price is not required and the only margin needs to be paid.
  • : Yes it is possible in derivative market. We can buy or sell Nifty futures or Nifty options. Lot size is 75.
  • : Cash settlement is an arrangement under which the seller in a contract chooses to transfer the net cash position instead of delivering the underlying assets whereas physical settlement can be defined as a method, under which the seller opts to go for the actual delivery of an underlying asset and that too on a pre-determined date and at the same time rejects the idea of cash settlement for the transaction.
1 Comment
  1. Naresh 8 months ago

    Hi,
    Your work is really good.

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