It gave a good understanding of both Futures and Options usage and it’s Pros and Cons as well.

  • The spot market or cash market is a public financial market in which financial instruments or commodities are traded for immediate delivery.

  • The exchange plays a major role in derivative instruments like futures and options. In futures exchange will maintain refundable margin from both the parties ,and manages the trade. In options it deals with the premium for the deal and executes it

  • Buying on margin is borrowing money from a broker in order to purchase stock. Strike price is the price at which a derivative contract can be bought or sold. lot size refers to the number of shares you buy in one transaction

  • An options contract gives an investor the right, but not the obligation, to buy (or sell) shares at a specific price at any time, as long as the contract is in effect while a futures contract requires a buyer to purchase shares, and a seller to sell them, on a specific future date unless the holder's position is closed.

  • Call / Put option is a financial contract between two parties, the buyer and the seller. ... Seller signs the contract but do not have any rights on the contract. Buyer do not have any obligations. Seller gets the Premium amount for signing the call/put option contract, where the premium is traded between buyer and seller.

  • A futures contract requires a buyer to purchase shares, and a seller to sell them, on a specific future date unless the holder's position is closed

  • Futures/ call/put are required for traders to customize the trading. In the derivative market, the entire stock price is not required and only margin needs to be paid. And derivative markets reflects the price fluctuation on daily basis but in equity market, it can be realized only when the stocks are sold

  • You can trade in Nifty in 2 ways. ... in case of Nifty this is 75, also called "LOT" size.

  • Cash settlement is an arrangement under which the seller in a contract chooses to transfer the net cash position instead of delivering the underlying assets.
    Under physical settlement, traders will have to compulsorily take delivery of shares on the expiry day against their derivative positions.

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