Derivative:- An Overview

Content

Derivative are financial instrument that derive their value from other existing asset classes known as underlying. The term "Derivative" indicates the instrument derives its values entirely from the asset it represents be it :

Derivatives instruments are legal contracts. All specifications are pre defined and binding

the asset represented will increase or decrease in value and within a set period of time.

specu lator who wishes to take more risk.

Arbitrageurs take advantage of discrepancy between prices in two different markets. Arbitrageurs keep market prices stable and reducing possible exploitation of prices.They are typically the most experienced market players who make fast decisions

risks. A speculator will accept a level of risk only if he is convinced that the associated

risks. A speculator will accept a level of risk only if he is convinced that the associated

A customized contract between two parties to full fill terms of the contract on a due date

to sell his harvest

conditions are clearly mentioned in the contract

date of delivery etc

different contracts

The difference between spot price and future price

The cost of funding underlying asset is cost of carry.

maintenance margin

walkout of contract in an unfavourable condition without obligation !!!!!

above strike price the premium goes up. The holder of

or below strike price the premium goes up. The holder of

unlimited gain unlimited loss

unlimited gain unlimited loss

contact you want to trade

and in option Type either call or put