FUTURES AND OPTIONS ARE THE TWO TYPES OF DERIVATIVES .THEY DERIVE THEIR VALUE FROM AN UNDERLYING ASSET(SHARES,CURRENCY OR COMMODITY)
FUTURES CONTRACT IS AN AGREEMENT BETWEEN TWO PARTIES EITHER TO BUY OR SELL AT A PRE DETERMINED PRICE,QUANTITY AND DATE.NO NEGOTIATIONS CAN BE MADE AT A LATER STAGE.NO DEFAULTS CAN BE MADE.IT IS REGULATED BY THE SEBI
OPTIONS ARE OF TWO TYPES CALL OPTION AND PUT OPTION
..CALL OPTION GIVES THE BUYER THE RIGHT TO BUY (BUT NOT THE OBLIGATION), TO BUY THE UNDERLYING ASSET AT A GIVEN STRIKE PRICE ON OR BEFORE A SPECIFIED EXPIRY DATE
PUT OPTION GIVES THE BUYER THE RIGHT BUT NOT THE OBLIGATION TO SELL A GIVEN QUANTITY OF AN UNDERLYING ASSET.AT THE TIME OF AGREEMENT
THE OPTION BUYER PAYS A CERTAIN AMOUNT TO THE OPTION SELLER CALLED THE PREMIUM
