List of Derivatives Articles

Investors choose derivative trading for its high potential of diversification and limiting their exposure to the fall of a specific asset class.

The financial lives of every individual has become complex as there are multiple incomes and a number of expenses. Such scenario calls for the need to keep the finances in order so as to avoid challenges in future. Every individual has a unique set of financial goals and challenges, which needs customized personal financial planning.

The difference between underlying securities current spot price and strike price represents the profit/loss that the trader makes upon sale or exercise of the option.

What do we understand by the term “Hedge”. The word hedge means protection or covering your risk.

Whether you trade in stocks, commodities or any other financial instrument, it can take place across a number of different platforms and in a number of different ways. However, some commonly employed trading methods have

Basis in derivatives is the difference between the spot price (current price) and the strike price (predefined price) of the futures contract.

Investors choose derivative trading for its high potential of diversification and limiting their exposure to the fall of a specific asset class.

Most of us who invest in stocks of a company know what is an IPO (initial public offering). An IPO is the first sale of a stock or share by a company to the public.

Time plays a crucial role in trading and traders want to buy and sell assets at the ‘right time’ to make more profit.

A future contract is a right and an obligation to buy or to sell an asset. Remember when we talk of types of futures contracts, there are futures across asset classes.

An index is a benchmark like the Nifty or the Sensex. Typically, indices can be generic benchmarks like Nifty and Sensex. Alternatively, indices can also be thematic benchmarks like the Bank Nifty, Nifty IT etc.

In the stock markets, pricing of any asset class is based on expectations. For example, the future price is the expected spot price and the spot price is nothing by the present value of the expected spot price.

The financial lives of every individual has become complex as there are multiple incomes and a number of expenses. Such scenario calls for the need to keep the finances in order so as to avoid challenges in future. Every individual has a unique set of financial goals and challenges, which needs customized personal financial planning.

Derivatives are standardised financial contracts traded in stock exchanges in a regulated manner.

Even when a broker claims that trading in futures and options is free of cost, it is not free. Even the low-cost brokerage houses make cash trading in delivery free of cost but brokerage on futures is charged.