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There are Basically Two Types of Derivative Instrument
1st Future and 2nd Option
In Future segment you can buy or sell stock in lot size which has validity date or we can say expiry date
with obligation it means whatever the future price the deal has be made buyer or seller get profit or loss
is the difference from the price on which the contract has been made and the date on which the contract has been settled
Where else
Option Trading
has two trading option 1st if call option and 2nd put option
In any option whatever the Price the deal has been made is called Strick Price
you can buy or sell CALL OPTION
or else
you can buy or sell PUT OPTION
Remember : Buyer of CALL OPTION or PUT OPTION Buys rights to buy or sell with obligation
where else Seller of the CALL OPTION or PUT OPTION GETS Premium for the rights give to the seller
The strick price also can be in the money or out of the money
for example : Nifty is Trading at 9000 and some one want to buy 8700 call option then it is called in the money contract
generally it has more premium then out of the money for example 9200 call option will be called out of the money contract
Remember : All call and put option also comes with expiry dates options and it has Time Value as well
There are 2 derivative instruments – 1. Futures and 2. options
In futures :
Both buyer and seller execute a deal on the same day and settlement happens on the future date. The difference between the executed price and the last minute price is the profit buyer and seller are going to make.
The ledger balance will be done on day to day basis and we have to make a caution deposit of 10%
In options:
Buyer has the rights but no obligation and the seller obligation and has no rights
The buyer is getting the below said rights
If the buyer has the right to buy he comes under CALL option (CALL option buyer and CALL option seller)
If the seller has the right to sell be comes under PUT option (PUT option seller and PUT option buyer)
The seller is signing the contract because he gets the premium from the buyer to get the contact signed
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