Spot market is where the settlement takes place on the same day.
Role of exchange to avoid counterparty risk.
When a trader buys a right to buy with an obligation is called Future buyer and when a trader sells a right with a obligation is called future Seller.
When a trader buys a right to buy without obligation then he is call option buyer and sells the option is call option seller.
When a trader buys a right to sell without obligation then he is put option buyer and sells it is put option seller.
Two types of settlements – cash and physical .
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