There are different modes in market like Spot market, Future market, Optional market. In spot market the settlement should be done by the end of the day by compensating the trader. In future the assets is exchanged by the end of the day and during the settlement day compensation will be done. In optional buyer only will get the assets to trade without any obligations by paying premium to the seller and at the settlement day the trading is exercised on buyers opinion.

  • : Spot market is an equity market where trade happens in spot. Equity market is having the part of ownership when you hold certificate of the company. Profit or Loss will be shared in direct DMAT account as the existing owner.
  • : Derivative instruments are Future and Options, the exchange is not done in spot moment it will be done in future and in present the traders will get only assets to sell or buy if it is future and if it is optional for call option buyer will get the rights without obligations and for put option buyer will get rights to sell without obligations.
  • : Margin-It is a deposit money to the broker to do the trading for futures. MTM- It is a method of valuating profit or loss that can change over time like assets and liabilities. Premium-It is per value of a share of stock and the selling price to investors. another terms buyer will give to the seller to execute the option trade. Strike Price- It is the price fixed by the the option seller to exercise the trade. Expiry Date- The date when the settlement happens. lot size- IT is total number of shares done in one transaction
  • : In future both buyer and seller have the rights, But in option buyers only will have the rights without obligations.
  • : when we expect the price may go up then trader can do call option by paying premium and when the expectation is to price may go down then the trader can do put option by paying premium. Premium is decided by the seller.
  • : Future contracts is to get the assets or rights by the end of the day to execute the trading after particular period of time.
  • : Instead of trading in short term futures is to get the rights and if the price goes beyond that level in particular period then the trading will happen. Call is buy put is to sell
  • : Trading NIFTY is also possible, Basically NIFTY is points if we expect the points will go up then we need to do future/optional to exercise the trading.
  • : Physical settlement is just getting the assets or shares at the end of settlement, But in cash the compensation is given at the end of the settlement.
1 Comment
  1. vignesh 4 years ago

    Hi sir,
    your answers are well framed and appropriate.

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