Market is the place for buying and selling. In this part of the FAQ, it tries to answer some of the basics of F&O. There is a fundamental difference between equities and derivatives. Equities are traded in cash or spot market. Wherein, actual delivery of stocks take place.
On the other hand, in the derivative segment, most often than not the trade is settled by cash. Derivatives are a kind of edging tool. There are two kind of derivatives. They are 1. Futures and 2. Options.
The futures is a contract between the buyer and the seller that by the agreed time period they have to buy/sell irrespective of its market price.
Whereas, the option provides for trading the rights to sell/buy within a future period.
Exchanges control these markets. Not all securities available in derivatives segment. If one uses these instruments they need to understand that they are trading using leverage.
Therefore, proper strategies are needed to trade with derivatives.
, , Futures and Options, Futures, MTM, options, settlement
Hi,
This is the appropriate answer for the question 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 obligation to buy.
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