subject: What is Nifty Option and Future market [print this page] What is Nifty Option and Future market What is Nifty Option and Future market
Futures: A futures contract is an agreement between two parties to buy or sell an asset at a
certain time in the future at a certain price. Futures contracts are special types of forward
contracts in the sense that the former are standardized exchange-traded contracts
Options: Options are of two types - calls and puts. Calls give the buyer the right but not the
obligation to buy a given quantity of the underlying asset, at a given price on or before a
given future date. Puts give the buyer the right, but not the obligation to sell a given
quantity of the underlying asset at a given price on or before a given date
A future contract is an agreement between two parties to buy or sell an asset at a certain time in future
at a certain pre decided price. Options give the buyer the right, but not the obligation, to buy (a call option) or sell (a put option) the underlying Stock or futures contract at a specified price up until a specified date.
An investor can purchase a Put option as insurance against a decline in the Stock price or a Call option in case the Stock rises. Buying an option gives the purchaser time to decide whether they will buy or sell the underlying Stock. The price is locked in until the expiry date, which in the case of LEAPS can be years into the future. Option market trade based on strick price this strick price decided by exchange.
Each contract of Nifty Future and Nifty Option of a particular month expires on the last Thursday of that month. That is, traders have to square off their positions in that particular month on or before the Last Thursday of the month.
Nifty future and Option need margin money it depend on exchange. Nifty future and option ranging from Rs. 25,000 to Rs. 40,000 for one lot.
Nifty Futures is a financial instrument in which futures contracts are done on the basis of S & P Nifty index which is the benchmark of NSE. Nifty stock is a type of market in which trading is done on the basis of the underlying index S&P CNX NIFTY.
Advantages of trading in NSE Nifty Index-
An index represent the entire stocks consisted in its exchange, so you can trade the entire Stock market' rather than individual stocks.
1. Highly liquid
2. Large intra-day price swings
3. High leverage
4. Low initial capital requirement
5. Lower risk than buying and holding stocks
6. You have to target only one index instead of 50's of stocks
