What Are Futures And Options?
Futures allow hedging against future market volatility by locking the price in an obligatory contract.
Options Are Derivatives
Because they derive their values from the underlying asset - the contract's value fluctuates along with the underlier's price movement.
There are two types - put and call. Call options give buyers the right to buy. And put options give you the authority to sell.
Premium is the amount you pay upfront as a buyer of the contract to the 'writer'. If the buyer exit the agreement, the writer gets to keep the premium paid.
Futures Offers True Hedge
It's a zero-sum game. Each party gets squared off at the end of the day based on the day's asset price movement.
It refers to the market where traders trade in F&O. It is different from the cash market where stocks trading happens.
Wealthy investors, asset management companies, banks are some everyday players, along with retail investors.
F&O allows investors to diversify and expand their investment capacity with margin benefits