Bullish Security
SPECULATION. BULLISH SECURITY. BUY FUTURES Take the case of a speculator who has a view on the direction of the market. He would like to trade based on this view. He believes that a particular security that trades at Rs.…
Tag stock market
Single Stock Futures
APPLICATIONS OF FUTURES AND OPTIONS The phenomenal growth of financial derivatives across the world is attributed the fulfilment of needs of hedgers, speculators and arbitraguers by these products. In this chapter we first look at how trading futures differs from trading the…
Stock market Questions And Answers
QUESTIONS AND ANSWERS ON CHAPTER Q. Which of the following cannot be an underlying asset for financial derivative contract ? Equity Index Commodities 3.Interestrat£ 4.. Foreign Exchange A. The correct answer is NO.2. • Q. In an option contract, the…
Options In 17th Century
USE OF OPTIONS IN 17th CENTURY Options made their first major mark in financial history during the tulip bulb mania in 17th. century Holland. It was one of the most spectacular get rich quick binges in history. The first tulip…
Futures And Options
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.…
Option Terminology
OPTION TERMINOLOGY INDEX OPTIONS: These options have the index as the underlying. Some options are European while others are American. Like index futures contracts, index options contracts are also cash settled. STOCK OPTIONS:Stock options are options on individual stocks. Options currently…
Introduction To Options
INTRODUCTION TO OPTIONS In this section, we look at the next derivative product to be traded on the -NSE, namely Options. Options are fundamentally different from forward and futures contracts. An option gives the holder of the option the right…
Futures Terminology
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…
Limitations of Forward Markets
LIMITATIONS OF FORWARD MARKETS Forward Markets world-wide are afflicted by several problems like LACK OF CENTRALIZATION OF TRADING, LIQUIDITY and COUNTER PARTY RISK. In the first two of these, the basic probk much flexibility and generality. The forwc. estate…
Introduction To Futures And Options
INTRODUCTION TO FUTURES AND OPTIONS In recent years, derivatives market have become increasingly important in the field of finance. While futures and options are now actively traded on many exchanges, forward contract s are popular on the OTC market. In…