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.

Have you ever wondered why there are different stock lot sizes in futures and options trading. One of the unique features of exchange-traded futures in India is that they are standardized.

If you have been trading in the commodity markets or the forex markets, you would be quite familiar with the concept of spot rates and forward rates.

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.