Equity Derivatives
Equity Derivatives are instruments whose values are partly derived from one or more underlying equity asset class. Futures and Options are the most commonly-traded equity derivatives products. You can engage in equity derivatives trading to hedge risks associated with long or short positions, or to speculate on the price movements of stocks or indices.
What are DERIVATIVES?
Derivatives are financial instruments without any independent value. Their value is derived from underlying assets such as index, stock, commodities bullion or currency. For example, a derivative of ITC share will derive its value from the share price (current market price) of ITC. In derivatives trading, the contract is traded and not the underlying asset.
What are the advantages of derivatives trading?
Derivatives act as a good hedging tool against price volatility.
You can take a high exposure on a stock or security by paying a small margin. For example: If the stocks are priced at Rs 10 lakh and you have only Rs 2 lakhs in hand, this product will still help you take a position.
Derivatives offe...
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What are the different types of derivatives?
Futures: In futures trading, it is the owner responsibility to buy or sell a contract at a pre-defined time and price. Here, there are standard conditions to follow.
Forward: It is the owner’s responsibility to buy or sell a contract at a pre-defined time and price. However, it the conditions...
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How do Futures Contract work?
Futures Contract is a contract to buy or sell pre-defined quantities of an instrument at a specified price and time.
Future contract has standardised conditions such as price, quantity and time.
The owner of the contract has the obligation to buy or sell in future.
Price is determined by supply and...
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