List of Derivatives Articles

It is important to understand the difference between forward and future contracts, especially for traders who are involved in the buying and selling of assets.

For financial planners, options could be a great tool to tide over turbulence in markets when things are uncertain, Vatsal Ramaiya says

Futures and Options represent Derivatives of the stock market. These Derivatives are the financial instruments deriving their values from an underlying such as currency, gold, or the stocks of a company.

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.

If you have opened the Nifty screen on the NSE website, you will find the link to an Option Chain at the top. Of course, this option chain is also available on your trading terminal, but the NSE Nifty option chain is available to everybody on a real-time basis on the website of NSE. Exactly what is Nifty option chain? It is the complete picture […]

Commodity options are structured like any other option on an index or stock in that the buyer has limited risk and the seller of the option has unlimited risk.

We know that an option in financial parlance is the right to buy or sell an asset without the obligation. For this right without the obligation, the buyer of the option pays a price which is called the options price or the option premium.

The cost of carry model is based on the premise that the futures price of an asset is the spot price plus the cost of carrying. This cost of carrying is an absolute number but the cost of carrying model presents it in percentage terms.

Covered call and covered put are two classic examples of a covered strategy where your derivatives position is actually backed by a cash market underlying position.

We all pay option premium when we buy options and receive option premium when we sell options. Have you wondered about the option premium meaning and its significance. Why do options command premium, what exactly this premium and who determines this premium amount?

when you hold naked options, you actually hold an option without holding the underlying security or the commodity.

In any business, you pay margin money to show your commitment and this gets adjusted to the final price.

Index Options are derivative instrument, which means their value is derived from the movements in the underlying index.

To understand settlement of options you need to break up the buy side and the sell side of the option distinctly.

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.