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Tagged: Expiry Date, lot size, Margin, MTM, Premium, Strike Price
Margin : A margin is collateral that the holder of a financial instrument hs to deposit to cover some or all of the the credit risk of their counter party ( broker/exchange)
MTM : It is the abbreviation of Marked to Market. The positions in the futures contracts for each member is marked-to-market to the daily settlement price of the futures contracts at the end of each trade day.
Premium : It is money paid by the option buyer to buy either call/put option. The seller of the option contract collects the premium to sell the rights to the buyer of the call/put option.
Strike Price : The strike price is defined as the price at which the holder of an option contract can buy (call option) or sell (Put option) of the underlying asset when the option is exercised.
Expiry Date : It is the last day that an options or future contract is valid.
Lot Size : It refers to the number of underlying shares in one contract. In other words, it is the quantity in which an investor in the market can trade in the Derivative of particular stocks.
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.
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