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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.
What else can I help you with?
What are the key differences between ES1 and ES2 futures?
ES1 and ES2 futures are both contracts that allow investors to speculate on the future price of the SP 500 index. The key difference between them is the expiration date. ES1 futures expire in March, June, September, and December, while ES2 futures expire in the months in between (February, May, August, and November). This difference in expiration dates can impact trading strategies and risk management for investors.
What are the benefits of trading micro futures options compared to traditional futures options?
Trading micro futures options offers several benefits compared to traditional futures options. These include lower capital requirements, reduced risk exposure, and the ability to trade in smaller increments. Additionally, micro futures options provide greater flexibility and accessibility to a wider range of traders, making them a more attractive option for those looking to manage risk and diversify their portfolios.
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.
In what ways are futures similar to options, and how do they differ from each other?
Futures and options are both types of financial derivatives that allow investors to speculate on the future price movements of assets. They are similar in that they both involve contracts that give the holder the right to buy or sell an asset at a specified price in the future. However, futures require the holder to fulfill the contract, while options give the holder the choice to exercise the contract. Additionally, futures are standardized contracts traded on exchanges, while options can be customized contracts traded over-the-counter.
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 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.
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 the difference between the two options?
The difference between the two options refers to the distinctions or variations between the choices being compared.
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.
What are the key differences between ES1 and ES2 futures?
ES1 and ES2 futures are both contracts that allow investors to speculate on the future price of the SP 500 index. The key difference between them is the expiration date. ES1 futures expire in March, June, September, and December, while ES2 futures expire in the months in between (February, May, August, and November). This difference in expiration dates can impact trading strategies and risk management for investors.
What are the benefits of trading micro futures options compared to traditional futures options?
Trading micro futures options offers several benefits compared to traditional futures options. These include lower capital requirements, reduced risk exposure, and the ability to trade in smaller increments. Additionally, micro futures options provide greater flexibility and accessibility to a wider range of traders, making them a more attractive option for those looking to manage risk and diversify their portfolios.
What is the difference between XP standard and enterprises?
Enterprises Has Alot More Futures If you Take a Tour ON it You will See.
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.
