List of Derivatives Articles

The credit spread Options strategy is a simple yet popular trading strategy. It involves buying and selling Call or Put Options with the same underlying asset and expiration date.

A ratio spread is a neutral options trading strategy in which an options trader holds an unequal number of long (purchased) and short (written) options contracts.

Derivatives are financial instruments that are aimed at managing risks inherent in any financial investment. The returns that derivatives allow investors to earn are based on the performance of the underlying assets that can be stocks, commodities, currencies etc.

The essential difference between call option and put option arises from the fact that one is an option to buy an underlying asset and the other an option to sell the asset.

When talking to an investor, you get to know that they lost all of their capital while trading. Thinking that they too would lose their capital, they pass on their idea of investing, thereby losing on huge wealth multiplication and profits.

Nifty options have emerged as the most liquid trading contract on the NSE. Today, options on the Nifty alone account for more than 80% of the total volumes on the NSE on a daily basis. This volume becomes higher as the expiry for the month approaches. Let us first spend a moment on the idea of a Nifty option.

If the derivatives contract expire on the last Thursday of the month, then what happens after that? That is what is called the derivatives settlement cycle.

Professional investors rely on their income from the Indian financial market to make a living. Hence, they need to find investments with the highest profit potential.

What do we understand by squaring off a futures transaction? To understand how to square off futures position, remember that futures position can be either long or short.

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

Futures and options are known as derivative products, which mean that they derive their value from an underlying commodity or asset. However, futures and options differ in fundamental ways from each other.

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 financial markets, leverage is used extensively to increase the potential return on investment. Leverage involves using borrowed capital or securities to fund a financial asset.

When you think about the basic idea behind investing, it seems to be fairly simple: you buy securities at a lower price and sell them when the price is high. However, all prospective investors need to realise and understand that

Equity investing is a great way to generate returns. However, there can be other rationales for investing in securities like leveraging a position or hedging risk.