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.

Calendar spread, as the name suggests is a spread strategy wherein you trade on the gap between two similar contracts rather than betting on the price.

Generally, new investors tend to put their money in stocks as they are one of the most sought after and straightforward asset classes.

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.

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.

In financial markets we all understand volatility as something very unstable and very bad.

Swap derivatives are an agreement between two parties with the goal to exchange a sequence of cash flows over a certain duration. For more visit India Infoline.

A vertical spread also called a credit spread, involves buying and selling Options of the same class (Call or Put) but different strike prices. Vertical spreads can be bullish or bearish

Managing risk is among the most important functions of security markets and one of the biggest risks is time. Time is a risk because prices change constantly

To understand settlement of options you need to break up the buy side and the sell side of the option distinctly. When a person buys a call or put option, the maximum loss is the premium paid. Hence the settlement of options on buy side begins with premium settlement and then you are done till the position is closed or expires. However, options settlement for sell side is more complex.

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.