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 […]

Consider you have a barrel of wheat that you want to sell three months from now, but you fear that the prices might fall in the future.

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).

Time plays a crucial role in trading and traders want to buy and sell assets at the ‘right time’ to make more profit.

A swap is an agreement that allows users to exchange the cash flows or liabilities from two different financial instruments.

Swaptions (Swap + options) is a derivative financial instrument with a swap as the underlying. One party called the writer or seller of the option gives another party called the holder or buyer of the option the right to exchange interest rates.

The Indian financial market is termed the ‘Market for Everyone’, as it includes financial instruments that can cater to the financial needs of every type of investor.

Investors are comfortable with the trading techniques they know will help them diversify. Once they know they have achieved their profit goals from equities, they move to other asset classes that have the potential to offer significant profits.

A short put is simply the sale of a regular put option. When a put option is sold, the seller is said to short the put option.

A basic principle in the stock market is the occurrence of both the market trends (Bear and Bull) at regular intervals. In the case of a bear cycle, the prices of the securities collapse, forcing investors to lose a chunk of their capital.

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.