Spot / Cash market:-where the trade and settlements are done on same day trading on equities in stock exchange Margin / MTM / Premium / Strike Price / Expiry Date / lot size Option Contract:-Seller gets only premium doesn’t hold any rights for signing the contract Buyer gets Rights doesn’t have obligations
Future contract:-Buyer Has Rights To buy Seller has Rights to Sell Premium Has To be Paid By Buyer & Seller Call Option:-An option that gives the buyer the rights to Buy but not the obligation, at the strike price before the expiration date.seller gets the premium for signing the contract
Put Option:-An option that gives the buyer the rights to Sell but not the obligation, at the strike price Seller signs the contract but do not have any rights on the contract Premium is decided in between Buyer & Seller
, , Futures and Options, call, derivatives, F&O, put
Hi,
This will be the appropriate answer for the question- Why should a trader need the futures/call/put? In equity market trader requires 100% money for trading. But in Future and options, the trader needs only a margin amount for trading and its most favorable reason to trade in F&O segment. The main purpose of derivatives is to reduce and hedge risk.
What are Margin / MTM / Premium / Strike Price / Expiry Date / lot size?: Margin – In a futures contract, you have required some percentage of the total contract as margin money. The margin amount may be in between 5 to 15% or 20% and usually decided by the exchange Market to Market-is settlement money on the daily basis statement for reporting purposes. The premium is paid to the seller of the option and is quoted on a per-share basis. Strike Price is the Price agreed between both the Buyer & Seller as per the contract Expiry Date in the derivative market always ends on last Thursday of the contract month. Lot Size – lot size represents the total number of contracts contained in one derivative security.