List of Derivatives Articles

The bear put spread strategy or bear put spread is when an investor sells a put option while simultaneously buying another put option with the same underlying asset and the expiration date.

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

Professional investors rely on their income from the Indian financial market to make a living. Hence, they need to find investments with the highest profit potential.

Professional investors who have been investing for numerous years swear by learning about the important trading techniques and strategies If anyone wants to create a robust investment portfolio.

To have expertise in investing and making profits, you need to be well-versed with all trading terminologies. Among various investment instruments that can allow you to earn hefty returns, Over-the-Counter or OTC derivatives are one of them.

The global capital markets are not just a place where directional trades are taken. By default, spread trading meaning is to trade the spread or difference between prices.

The bear put spread strategy or bear put spread is when an investor sells a put option while simultaneously buying another put option with the same underlying asset and the expiration date.

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.

Rollover may sound like a complex and high flying esoteric word but in reality it is quite simple. You must have heard the word rollover quite often concerning futures. Traders often refer to rollover in the stock market as long rollover or short rollover.

A common belief in the Indian financial market is: the more complex the strategy, the higher is the potential for profits. The same goes with Options trading and its numerous complex strategies.

A futures is a contract to buy or sell an underlying asset at a future price, called the exercise price, at a future date, called the expiry date.

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

A bullish options strategy can be an effective way to increase your investment profits while reducing the amount of risk at any given time.

Shout Options are among the league of more complex aspects of stock trading. But, learning how to use them can help you take your trading strategy to the next level. Shout Options are one of the many types of derivatives contracts available to traders, and they are widely misunderstood because there are several different ways to use them.

During the last week of every month, we tend to hear the words like derivatives settlement and derivatives expiry on all the business and news channels.

Whether you trade in stocks, commodities or any other financial instrument, it can take place across a number of different platforms and in a number of different ways. However, some commonly employed trading methods have

When you think about the basic idea behind investing, it seems to be fairly simple: you buy securities at a lower price and sell them when the price is high. However, all prospective investors need to realise and understand that

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.

For financial planners, options could be a great tool to tide over turbulence in markets when things are uncertain, Vatsal Ramaiya says

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 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.

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

One of the most popular and widely used words in the lexicon of F&O trading is open interest. As the name suggests, open interest represents the open futures and options positions in the market that are yet to be closed out or exercised or expired.

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.

For traders who rely on technical analysis for devising trading strategies, price movements and past trends aid in decision making.

An Iron Butterfly Strategy or Iron Fly Strategy is an options trading strategy that combines multiple call and put options to devise a market neutral strategy.

Are you a trader or investor who has been actively engaged in the commodity markets? If yes, you need to get an insight into the futures of crude oil trading. Crude oil is considered one of the most significant commodities to trade in the country due to its constant worldwide demands. The demand for crude oil globally makes it a top-notch commodity in India and […]

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.

While commodity futures may appear to be a modern concept, their roots in India extend far into the past. As early as 1875, there existed a cotton futures exchange. However, futures trading in essential commodities ceased in the 1960s due to concerns about speculative practices and hoarding. It wasn’t until 2002 that futures in commodities made a comeback in India. Read on to learn more […]

What do we understand by the term “Hedge”. The word hedge means protection or covering your risk.

The Indian stock market is as simple as it gets: you buy stocks at a low price and sell them when the price is higher and make profits based on the price difference.

A legal agreement involving the sale and purchase of a certain commodity, asset, or security at a predetermined price at some point in the future is known as a future contract. To facilitate their trade on the futures exchange

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.

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

To understand settlement of options you need to break up the buy side and the sell side of the option distinctly.

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.

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

Minimum margin or maintenance margin is the number of stocks investors must maintain in their margin account.

Contango is a common usage in the futures market, especially when it comes to futures on commodities. Here we try to understand contango meaning and contango definition.

If you’re planning to become a successful trader, it’s important to learn how to spot sideways markets and find ways to make the most of them.

Options trading is a lucrative yet risky investment avenue. The risk, as well as rewards involved in Options, tend to be higher.

In any business, you pay margin money to show your commitment and this gets adjusted to the final price.

Share derivatives priced between Rs201 to Rs400 would have a lot of 1,000 units; between Rs101 and Rs200 in lots of 2,000 units; Rs51 to Rs100 at 4,000 units and Rs25 to Rs50 in lots of 8,000.

The stock markets permit you to buy and sell in equities, futures, options, etc. In all these trades, you take a view on the movement of the security in question and take a position. However, there is also another way of doing this, i.e. betting on the spread.

The universal truth of the financial market is volatility. Investors who are inexperienced fear volatility as they think it can lower the value of their investments.

A bear call spread is a two-legged options trading technique that involves selling a call option with a lower strike price to collect an upfront premium and simultaneously buy a new call option with a higher strike price.

Almost all investors start their investing journey through the stock market. The idea is simple, you buy the shares at a low price and sell them when the prices are high, thereby making a profit.

To understand options, one needs to understand options features and option contract features.These options features and option contract features refer to the basic DNA of an option contract.

An index is a benchmark like the Nifty or the Sensex. Typically, indices can be generic benchmarks like Nifty and Sensex. Alternatively, indices can also be thematic benchmarks like the Bank Nifty, Nifty IT etc.

Most of us who invest in stocks of a company know what is an IPO (initial public offering). An IPO is the first sale of a stock or share by a company to the public.

Professional investors rely on their income from the Indian financial market to make a living. Hence, they need to find investments with the highest profit potential.

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.

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.

The Indian financial market and its numerous investment instruments come with their risks and rewards. While investors can reap the rewards with the right amount of research and an ideal trading strategy, the risks can seem harder to manage and minimise if

In India, the futures and options market has currently become a popular avenue for investors seeking a more significant portion of the Indian stock market. The craze of F&O in India holds a strong grip over the investors. Nevertheless, several traders and investors who are a beginner in the derivative market are primarily uninformed of the process of how it works or the concept of […]

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.

When investing in the Indian financial market, one thing to be certain: Risk. Market risk is the most common and universal within every asset class in the financial market.

Commodity options are structured like any other option on an index or stock in that the buyer has limited risk and the seller of the option has unlimited risk.

A Long Combo strategy is a well-known Bullish trading strategy. This options strategy is generally used when there is a degree of certainty about the rise of market prices.

In the options market you often come across terms like the intrinsic value, the time value etc. In addition, you also hear the popular Black & Scholes model.

If you have opened the Nifty screen on the NSE website, you will find the link to an Option Chain on 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. What exactly is an Option Chain? It is the complete […]

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

If you trade in the futures and options space in India, You would have regularly come across the term stating that a particular stock is in the F&O ban period.

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 short call is an options trading strategy for bearish traders. Essentially, short call traders are bet on a share price fall and benefits from a fall in prices.

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.

A futures contract is a right and obligation to buy or sell a contract at a future date at a price that is determined and agreed upon today.

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.

when you hold naked options, you actually hold an option without holding the underlying security or the commodity.

Professional investors understand every factor that can affect the Indian financial market.

Derivatives are standardised financial contracts traded in stock exchanges in a regulated manner.

Traders typically engage in investments with the expectation of a rising market, and occasionally, they make some investments hoping for a downward price movement. However, it’s common for prices to remain relatively stable. Wouldn’t it be appealing if you could generate profits even when the markets are not showing significant movement? Well, you can achieve this through options trading, particularly by employing the strategy known […]

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

One of the most common term you get to year in the derivatives market is the term “Underlying Asset”.

Equity investing is a great way to generate returns. However, there can be other rationales for investing in securities like leveraging a position or hedging risk.

The stock market has proven to be the preferred investment avenue for many investors, beginner or experienced.

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

Derivatives are standardised financial contracts traded in stock exchanges in a regulated manner.

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

Professional investors who have been investing for numerous years swear by learning about the important trading techniques and strategies If anyone wants to create a robust investment portfolio.

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.

A Bear Call Ladder is a three-legged options strategy that is usually set up for a ‘net credit’ of premium.However, to understand the strategy, the first step is to understand some common jargon related to Options Trading.

To have expertise in investing and making profits, you need to be well-versed with all trading terminologies. Among various investment instruments that can allow you to earn hefty returns, Over-the-Counter or OTC derivatives are one of them.

What do we understand by squaring off a futures transaction? To understand how to square off futures position, remember that futures position can be either long or short.

Options strategies are basically combinations. We shall look at various types of options strategies along the way and also now to apply such option trading strategies along the way.

If you want to trade futures, you start with opening your trading account with a SEBI registered broker like India Infoline Securities.

An option is a right to buy without the obligation to buy or a right to sell without the obligation to sell. The former is the buyer of a call option and the latter is the buyer of a put 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.

Investing is one of the best ways to utilise your disposable income. However, it is always best to go with investment tools that offer high security and guaranteed returns when you first start investing.

Any trading in the capital markets is risky and there is no getting away from it. The best you can do is to smartly and prudently manage this risk.

tock exchanges are an excessively volatile arena, which means the market swings constantly. The most common way to profit from market swings is Options. T

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.

In the stock markets, pricing of any asset class is based on expectations. For example, the future price is the expected spot price and the spot price is nothing by the present value of the expected spot price.

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.

We all pay option premium when we buy options and receive option premium when we sell options. Have you wondered about the option premium meaning and its significance. Why do options command premium, what exactly this premium and who determines this premium amount?

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.

Options trading involves various permutations and combinations of Call and Put options.

The financial lives of every individual has become complex as there are multiple incomes and a number of expenses. Such scenario calls for the need to keep the finances in order so as to avoid challenges in future. Every individual has a unique set of financial goals and challenges, which needs customized personal financial planning.

Equity is the share of a company that you, as an investor, own. Such equity, in turn, allows you access to the gains of the 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.

The cost of carry model is based on the premise that the futures price of an asset is the spot price plus the cost of carrying. This cost of carrying is an absolute number but the cost of carrying model presents it in percentage terms.

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.

One of the unique features of exchange traded futures in India is that they are standardized. One of the methods of standardizing futures and options contracts is through the prescription of minimum lot sizes.

A Long Call Condor, similar to a long butterfly strategy, is a neutral market-view strategy that offers limited risk and profit.