future and option trading -derivatives- expiry date in future.
future-MTM- right to buy -buyer; right to sell- seller;
option- call option-right to buy+no obligation- strike price-above the mkt price + premium to seller.
put option- buyer- right to sell- gets profit when market price falls below the strike price- premium to seller (no obligaton).
- : deal and settlement of a trade is made on the same day in the equity market.
- : in both future and option trade, exchange acts as a platform to meet the rightful buyer and seller. in ensures transparency. it also plays the regulator role.
- : MARGIN- it is caution deposit given to exchange, to avoid default at the end of the day. MTM-mark to market money debited and credited in buyers/sellers account as per the market fluctuations of the contract. PREMIUM- money given to the seller to sign the contract. STRIKE PRICE- the price which is above/below the market price in call and put option buyer. EXPIRY DATE- future maturity date as per the contract. LOT SIZE- number of shares which u buy in a single transaction.
- : Future contract (FC) = buyer/seller=RIGHTS WITH OBLIGATION + MTM backup. Option contract= buyer/seller= RIGHTS WITHOUT OBLIGATION + PREMIUM.
- : In call option, the buyer has right to buy, but no obligation. In put option, the buyer has the right to sell, but no obligation. I both the case, premium is paid by the buyer to the seller. this premium is above the market price in call option& below the market price is put option and it is decided based on the consensus between the buyer and seller.
- : expiry date of the contract is made in future. usually end of the month. the settlement is made daily in MTM basis.
- : when a trader sure shot knows that the market is going to be bullish or bearish for long run, they can make money with just the margin or premium amount paid.
- : yes. you can trade in nifty by derivatives or by mutual funds.
- : physical settlement is physical transfer of shares in intraday trading. cash settlement is used in future and option trading where cash settlement is made out in terms of money settled in future day course.