In futures market, profit will be realized on a day to day basis. It provides an opportunity for short trades to be placed which cannot be placed in equity market.
A Call option gives the right to buy to the buyer.
A put option gives the rights to sell to the buyer.
A spot market is also known as the equity market. It is called equity because all the shares are equal in nature.
The exchange acts as the middleman in derivative market making. It collects a caution deposit and makes sure trades are happening in a fair manner.
- Buying on margin is borrowing money from a broker to purchase stock. MTM is a way to evaluate the current position and determining profit and loss.
- A strike price is used in a call and put option, which simply determines the price at which the contract becomes active. Expiry date is the date when the contract expires Lot size – The no. of shares we buy in one transaction
- In a future contract, both the buyer and seller have rights to buy/sell.
A buyer of CALL option has rights to buy, but no obligations. A seller of CALL option gives rights to the buyer. He has obligations but no rights. A buyer of PUT option gets the rights to sell, but no obligations.: Call option – Buyer gets rights to buy but no obligations Put option – Buyer gets rights to sell but no obligations The buyer and seller decide the premium.
