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Derivatives;
derviatives is the product its price is derived from underlining asset (underlining asset my be stocks,bonds,commodities,etc)
derivatives are as follows
futures and options it normally call as F&O...
futures:it is a contract between two parties to purchase and sell of products for future period at pre-determind price....
options:it is the right but not the obligation to buy or sell underlining assets....
call option:is the right but not the obligation to buy the underlining asset....buyer may refuse the contract before the maturity of contract.
put option:it is opposit of call option......
The primary difference lies in the obligation placed on the contract buyers and sellers. In a futures contract, both participants in the contract are obliged to buy (or sell) the underlying asset at the specified price on settlement day. As a result, both buyers and sellers of futures contracts face the same amount of risk. On the other hand, the option contract buyer has the right but not the obligation to buy (or sell) the underlying asset. Hence the term "option" and this option comes at a price in the form of a premium (more specifically, the time value of the premium). With this "option", the option buyer's risk is limited to the premium paid but his potential profit is unlimited. Sellers of options take on an additional volatility risk in exchange for the premium. However, their potential profit is then capped while their potential losses has no limit. Hence, this premium can be high if the underlying asset is perceived to be very volatile.
Kendall Kris
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Where can one find out more on commodity futures options?
If you want to find out more information about commodity futures options then you can go to the website Commodity World which is a free site where you can do research.
How does one learn about making money from futures and options trading?
There are several online websites that can teach a person about making money from futures and options trading. The best sources are talking to brokers in a Brokerage Firm.
Are options contracts referred to as future contracts?
No. Options let you decide whether to go through with the transaction; futures require that you do.
What are the two major financial market-traded forms of financial derivatives?
Futures and options
Basic difference between forward contract and future contract?
Futures are traded in Organized Exchanges while Forwards are Over-The-Counter (OTC) traded
What is the difference between investing in the stock market and futures and options trading?
Options and futures are derivatives of Stocks. This means that options and futures derive their value from the stock that they are based on. For a simplistic explanation, a call option with a strike price of $10 gains $5 in value when its underlying stock rises by $5 above $10. If the stock does nothing, then no value is gained. As such, buying options or futures isn't the same as buying the stock itself because by owning these derivative instruments, you do not own the stocks they are based on.
Explain the difference between a call option and a long position in a futures contract?
The only difference between a long call option and a long futures position is the derivative itself--one of them is an option, the other is a futures contract.
What are the differences between future and option contract?
There's one main difference and it's huge: An option contract gives the person who buys it the privilege of doing whatever it is the contract is written for. A futures contract imposes an obligation on the buyer. There are also liquidity requirements and requirements to pay performance bonds in futures trading that don't exist in options trading, but the real basic difference is that an options buyer can do something and a futures trader has to.
What are commodities futures options used for?
Grain farmers use commodities futures options for getting their products on the market. Without commodities futures options, farmers would have a tough time selling their products.
What does the phrase cash for settlement refer to?
The phrase "cash for settlement" refers to sellers who do not wish to take actual possession of a commodity. It is a more convenient method of transacting futures and options contacts. E.g. if you purchased cotton futures that are cash settled, instead of taking possession of the actual cotton, it pays the difference between the spot price of the cotton and the futures price.
Why are futures and options risky investments?
Futures and options are no more risky than equities, bonds, or foreign exchange trades. Futures are a standardized contract between two parties to buy or sell a specified asset at its current price at a specific date in the future. An option is the same thing, but without the obligation to buy.
What is a commodity futures trading brokers?
Commodity brokers specializing in futures and options trading offer charts, futures quotes,options prices, news, margin rates and advice. A firm or individual who trades for his own account is called a trader. Commodity contracts include futures, options, and similar financial derivatives.
Where can one read reviews about Gold Futures and Options?
You can read reviews about Gold Futures and Options on financial websites like Investing.com, The Wall Street Journal, or Bloomberg. You can also check out forums and discussion boards dedicated to trading and investing to see what other investors have to say about their experiences with Gold Futures and Options.
What has the author Joseph D Koziol written?
Joseph D. Koziol has written: 'A handbook for professional futures and options traders' -- subject(s): Commodity exchanges, Financial futures, Futures, Option (Contract), Options (Finance)
Where can one find information about the website futures options?
There is a website called Gofutures, and they have information on futures options. The site has demos, charts, and graphs to show all the information.
What are derivative trades?
Derivatives are financial instruments that derive their price and values from their underlying asset. Examples of derivatives are options and futures. Both options and futures derive their value from their underlying stocks. Trading derivatives means buying options or futures instead of the stocks itself mainly for leverage.
What is the difference between XP standard and enterprises?
Enterprises Has Alot More Futures If you Take a Tour ON it You will See.
