Future contract may give bulk return but risk also more on this segment
Recently Active Members
Bullish View
Bearish View
-
Bearish-GAP-SHORT-BICON-25-10-2019 October 25, 2019
-
FEDERAL BANK – BEARISH ENGULFING October 17, 2019
-
Cummins India – Bearish Engulfing – 24Sep19 September 25, 2019
-
Day29-Tata Motors DVR – Bearish Piercing – 12Sep19 September 12, 2019
-
Day27-Bearish-Engulfing pattern-Tech Mahindtra-09Sep19 September 10, 2019
Hi,
Please find the below suggestion the your answers
Q.)What is call option and put option?
In options contract , Call option buyer has right to buy with no obligation while Call option seller has an obligation to sell at the end of expiry . Put option buyer has right to sell with no obligation while Put option seller has an an obligation to buy.
Q.)What are lot size? Lot Size – lot size represents the total number of contracts contained in one derivative security.
Q.)Why should a trader need the futures/call/put? In equity market trader requires 100% money for trading. But in Future and options, trader need only margin amount for trading and it’s most favorable reason to trade in F&O segment. The main purpose of derivative is to reduce risk of future price uncertainty through hedging and arbitraging like if you purchase Voltas future contract at the rate of 651 with the expectation of on future the price Voltas future contract will increase but all of sudden there is negative movement in this future contract so you may loss. To avoid this loss you can take an opposite position through put option with same stock in put option premium increase when the market is bearish or price of underlying asset decrease. that is called hedging in which losses can be reduces by taking an opposite position in different contract in same underlying asset.