Futures and Options

Futures and Options are derivative instruments where trade is made based upon the future expectations of stock prices. Future contract is the contract of buying and selling stocks on the agreed price of the agreed quantity on the predetermined future date. Cash settlement is done on day to day basis by MTM (Mark To Market). Call option is the option to buy the stock at the strike price on or before the expiry date and there is no obligation to buy the stock and premium has to be paid for to buy the call option.Put option is the option to sell the stock at the strike price on or before the expiry date.and there is no obligation to sell the stock and premium has to be paid for to buy the put option.