Futures And Options Trading India- Common Forms Of Derivatives

In few cases, derivative instruments prove to be an outstanding means that help you

to have the maximum return on your investments, which also helps you to have a good financial portfolio.

Since derivative instruments normally depend on the power of an underlying security or set of securities, it is important to evaluate the present status of those securities, as well as precisely project their potential movement.

Futures and options trading India derivatives are the two most common forms of "Derivatives".

Futures- is a standardized agreement between two parties to either buy or sell a particular asset of uniform quantity and quality, on a specific future date at a price that is agreed on the current day. (The futures price).That is, the contracts are traded in future for exchange.

Every futures option would surely have the following:

Buyer: The one who would buy

Seller: The one who would sell

Price: The agreed price

Expiry: The date at which it would expire

Options- It gives one the right, but theres no compulsion, to either buy or sell at a future contract at a considered price for a particular period of time. Option is further divided in two parts.

PUT OPTION This permits all the buyers with the right to sell their underlying Assets

CALL OPTION- This option permits the buyer with the right to buy the underlying assets.

Futures contracts derivatives provide the holder with a responsibility to make or take delivery, under the terms that are mentioned in the contract, while in option the buyer has the right, but has no compulsion, to render a position that was before held by the seller of the option. Futures and options trading India derivatives are considered as one of the most significant forms of derivatives and so call for a suitable discipline and knowledge to manage them successfully.

Thus, those who are dealing in Futures and options trading India derivatives should always look for a financial firm that has good knowledge and experience to help you understand derivatives properly.

by: Sharad Gaikwad

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