Before you decide not to invest in Derivatives, you should understand them
What is a Derivative ?????
Investopedia Definition:
A derivative security can be defined as a security whose value depends on the values of other underlying variables.
Futures & Options are the most common types of derivatives.
A Futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price.
An Option is a contract, which gives the buyer the right, but not the obligation to buy or sell shares of the underlying security at a specific price on or before a specific date.
The primary Difference between options and futures is that options give the holder the right to buy or sell the underlying asset at expiration, while the holder of a futures contract is obligated to fulfill the terms of his/her contract.
From today I would like to share my experiences with derivatives and in the same time explain few basic principles. This tutorial will be in phases n I will go slowly and post small articles so that everyone can digest it.
Investopedia Definition:
A derivative security can be defined as a security whose value depends on the values of other underlying variables.
A Futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price.
An Option is a contract, which gives the buyer the right, but not the obligation to buy or sell shares of the underlying security at a specific price on or before a specific date.
The primary Difference between options and futures is that options give the holder the right to buy or sell the underlying asset at expiration, while the holder of a futures contract is obligated to fulfill the terms of his/her contract.
Just try to look at the picture and get the basic understanding. Details will be available in future posts.
Click on the image to see larger picture.
Disclaimer:
Derivatives involve risks and are not suitable for everyone. Derivatives trading can be speculative in nature and carry substantial risk of loss. Only invest with risk capital.
Follow up article to Y Derivatives?
Derivatives involve risks and are not suitable for everyone. Derivatives trading can be speculative in nature and carry substantial risk of loss. Only invest with risk capital.
Follow up article to Y Derivatives?
6 comments:
Good Job Ashish.
I am sure the readers will definitely benefit from your articles.
Thanks.
Good one.. keep posting..
sumit..
THE EQUICOM CALL: BUY BANK NIFTY 19400 CALL ABOVE 325.00 TG- 340.00/380.00/450.00 SL- 290.00 (CMP- 323.00).
stock option tips provider
Really informative piece of information is shared here by the author. I liked and enjoyed reading it.
Equity Trading Tips
Very useful information from trading point of view has been shared here. Traders must learn about market before beginning with trading. Free learning platform is provided by epic research as well.
Post a Comment