List of Derivatives Articles

Theta options are defined as an options greek that measures the rate at which the option loses its time value as the expiration date draws near.

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.

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.

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

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.

A popular adage is, “you cannot time the markets”. However, options provide a way for investors to decide whether to buy or sell the underlying in a given timeframe. Traders use them to hedge their positions and protect against downside risk (losses) or enhance their gains (profits).

Currency options are a low upfront cost method of participating in the currency derivatives market. Like currency futures, currency options are also available on pairs like the USDINR, EURINR, GBPINR etc.

If you are a trader in the F&O market, you must be familiar with concepts like European Options and American Options.Here we look at what are American options and we also look at the European Option definition.

Is it really possible to have strategies in futures? After all, futures are plain vanilla products just like the cash market? The truth is that there are futures strategies that are possible in the market.

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.

Futures and options are not just about trading and hedging but also about simple and hybrid strategies Futures and options strategies are at the core of derivatives and there are a variety of F&O trading strategies that one can safely and effectively apply.

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.

A European option can be exercised only at the expiration date, whereas the American Option can be exercised at any time on or before the expiration date. The right of the option buyer is a lot more powerful in an American option.

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.

If you are an investor looking for short-term financial instruments, Options is a great option. It is a derivative contract that gives the owner the right to buy or sell securities at an agreed-upon price within a certain period.