Every single share has the same value of a particular company. In derivative instruments, Exchange will get a caution deposit from buyer and seller. Obligation is the difference between future and option. Buyer and seller decides the premium in derivatives. All the derivatives will help the trader to exit from the risk level by giving various trading opportunities.We can trade NIFTY in derivatives.

  • : Buying and Selling will be held in the same day is referred as Spot/cash market or Equity Market. All the shares are equal in nature thats y it is referred as Equity market.
  • : 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.
  • : Margin - Caution deposit paid to exchange for executing any future contract. MTM - Mark To Market is levelling the strike price to the current market price by compensating the benefited party. Premium - The amount paid by buyer to seller when signing a Call/Put option Strike Price - Price agreed by the seller and buyer to do settlement on derivative instruments. Expiry Date - Maturity date of derivative instruments. Lot size - Minimum quantity to be trade for any derivatives.
  • : The main difference between Options and Futures lies in the obligations they put on their buyers and sellers. In Future, Both buyer and seller has the rights to buy and sell respectively. But in Option, buyer has the rights but with no obligations and seller has no rights at all.
  • : Call Option Buyer expects the market price to go up beyond the strike price at the maturity. So buyer is ready to pay the premium that the buyer expects to take the risk. Buyers risk is limited to the premium but sellers risk is beyond the premium. Put Option: Buyer expects the current market price to go down below strike price at the maturity. So Buyer is ready to pay the premium that the seller expects to take that risk. In both call option and put option, the premium is decided by buyer and seller together.
  • : A legal agreement to buy or sell instruments at a predetermined price at a specified date in the future.
  • : With proper trade plan, Trading instruments like Future, Call and Options gives various trading opportunities in both bearish and bullish with minimum risk.
  • : Yes, It is possible to trade NIFTY in Futures and Options using index. The permitted lot size is 50 and multiples of 50. Ten to Twelve percent is the margin value.
  • : In a physical settlement, The asset has to be given to the buyer. In a cash settlement, a buyer accepts cash as a form of settlement.
  1. vignesh 4 years ago

    For Example:
    If you analyze the NIFTY and say that NIFTY will go up 100-200 points from the current 10,000 mark within April 30th, then
    you can buy NIFTY April 2018 Future contract or
    you can buy NIFTY April 2018 call option contract with a strike price of 10,000.

  2. Author
    Mangai 4 years ago

    Hi..Thanks for ur kind answer. And it is more understandable.

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