feel free to call us +919500077790 info@eqsis.com
Tagged: Exchange and Derivatives
What is the role of exchange in derivative instruments?
In futures, exchange will get the refundable margin from buyer and seller. The contract will be traded between buyer and seller on the strike price for the stocks. Once the contract is agreed, exchange will take care of mark to market on daily basis until the end of the contract.
In options, exchange will execute the trading of the premium between buyer and seller and once agreed, exchange will take care of daily leveling, but the buyer of the contract do not have any obligations.
The exchange plays a major role in derivative instruments like futures and options.
In futures exchange will maintain refundable margin from both the parties ,and manages the trade.
In options it deals with the premium for the deal and executes it.
Exchange plays the role of mediator in derivative instruments. In Futures the exchange collects the margin from both the buyer and seller, does the mark to market and on the expiry date makes the settlement for the deal happen. In options exchange settles the premium deal between the buyer and seller, does the mark to market on a daily basis and takes care of the final settlement
The exchange creates the futures and the options instruments available for the traders with various expiry dates. It guides and protects the buyers and sellers with certain rules and regulations.
EQSIS, A Stock Market Research Firm
Knowledge is Power. Here you may start from basics, get support while practicing and evolve as active analyst, later you can become a pro