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 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…
DISTINCTION BETWEEN FUTURES AND FORWARDS CONTRACT. Forward contracts are often confused with futures contracts. The confusion is primarily because both serve essentially the same economic functions of allocating risk in the presence of future price uncertainty. However futures are a…
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…
USE OF FUTURES MARKET RY INDEX FUNDS Futures markets can be used for creating synthetic index funds. Synthetic index funds created using futures contracts have advantages of simplicity and low costs. The simplicity stems from the fact that index futures…
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…
Most of the commonly followed stock market indexes are of the following two types: Market capitalization weighted index or price weighted index. In a market capitalization weighted index, each stock in the index affects the index value in proportion to the…
ECONOMIC SIGNIFICANCE OF INDEX MOVEMENTS How do we interpret index movements? What do these movements mean? They reflect the changing expectations of the stock market about future dividends of the corporate sector. The inde.’S goes up if the stock market…
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…
The futures and options trading system of NSE. called NEAT F&O trading system, provides a fully automated screen based trading for Nifty futures and options and stock futures and options on a nation wide basis and an online monitoring and…