List of Derivatives Articles

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.

A Short Straddle is a complex Options strategy that consists of selling both a Call option and a Put option, with the same strike price and expiration date.

Currency derivatives are positions that obtain their value from the underlying currency.

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.

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.

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.

It often happens that you plan to put some trades in stocks like BHEL, Sun TV or Vodafone Idea in the futures & options market but then your broker tells you that you cannot take fresh positions as the stock is in the F&O Ban List.

Derivatives, especially options contracts, have provided tremendous profits to experienced investors who understand the technicality of the derivative contract.

Derivative trading is one of the most rewarding asset classes for investors who have allocated some capital into equities. Professional investors choose Options contracts within derivatives to ensure they remain liquid and make profits in almost every market situation.

A bull call spread strategy is an Options trading strategy that uses two Call Options with different strike prices to create a range.

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.

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).

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

If you are in the capital market, then volatility is part and parcen of the game. Of course, by volatility we mean that the markets fluctuate and add to your risk.

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.