QUICK REFERENCE GLOSSARY ON FUTURES AND OPTIONS FUTURES TERMINOLOGY SPOT PRICE: The price at which an asset trades in the spot market. FUTURES PRICE: The price at which the futures contract trades in the futures market. CONTRACT CYCLE: The period over which a contract trades. The index…
FUTURES AND OPTIONS MARKET INSTRUMENTS The Futures and Options segment of NSE provides trading facilities for the following derivative instruments. INDEX BASED FUTURES INDEX BASED OPTIONS INDIVIDUAL STOCK OPTIONS INDIVIDUAL STOCK FUTURES CONTRACT SPECIFICATIONS FOR INDEX FUTURES NSE trades Nifty,…
BASIS OF TRADINGThe NEAT F&O system supports an order driven market, wherein orders match automatically. Order matching is essentially on the basis of security, its price, time and quantity. All quantity fields are in units and price in rupees. The…
OPTIONS PAYOFFS The optionality characteristic of options results in a nonlinear payoff for options. In simple words, it means that the losses for the buyer of an option are limited, however the profits are potentially unlimited. For a writer, the…
FUTURE PAYOFFS Futures contracts have linear payoffs. In simple words, it means that the losses as well as profits for the buyer and the seller of futures contract are unlimited. These linear payoffs are fascinating as they can be combined with…
FUTURES AND OPTIONS An interesting question to ask at this stage is, when would one use options instead of futures? Options are different from futures in several interesting senses. At a practical level, the option buyer faces an interesting situation.…
The S&P CNX Nifty is an market capitalisation index based upon solid economic research. It was designed not only as a barometer of market movement but also to be a foundation of the new world of financial products based on…
CHAPTER TWO MARKET INDEX To understand the use and Function of the Index derivatives Markets, it is necessary to understand the underlying index. In the following Section, we take a look at index related issues. Traditionally, indexes have been used…