Futures and Options trading

Future trading is a contact between two people who agree to buy and sell stock for the certain length of time. Further, it’s a kind of investment which often involve compete on the cost of a commodity going up or down in the future. In the simple words, dealing in the stock frequently is known as the future Trading.

Future trading basically divided into two types;

Future contract:

Future contract is the process of future exchange, to buy and selling on the regular basic on a stipulated price. However, the future has an expiry date; meanwhile, seek to trade between these months.  You can cancel it any time until it expires. Interim traders hold the contract for the month, even some minutes.  Future contracts are identical on the basis of quantity, quality and delivery time; eventually investors can execute their strategies over here.  Generally, Trade option on future contract could be limited risky; therefore, always seems low probability of loss.

Future option:

It’s an instrument which gives the rights to buy and sell core assets at certain cost, ‘call’ option and ‘put’ option are two basic future option. However, call option gives the right to buy asset on specified cost and investment in option needs not as much of capital as you expected; therefore, buyer could make unlimited return through it. Whereas the ‘put’ also the right to buyer; however, not the obligation to sell on a specific price or by certain future date.  Often, future option preferred as hedger with no obligation to buy or sell their Underlying assets.

Here, we describe some key term related to future contract and future option;

Strike rate: it refers to the pre-specified price at which investors decided to buy or sell on upcoming date.

Expiration date: a date on which the contract expires and after expiry dates, the entire contract turns into null and void.

Underlying Asset: basically, it’s a financial instrument on which a derivative cost is based such as; future, commodity and index.

Indeed, share market boom in the past few years, investors keeps on eye on the market with the great anticipation.  Being investors, it’s your responsibly to get aware every year major to minor information before trading in future to lessen your losses and plan for gains. Ashlaronline provides expert opinion on each and every facet of trading in future; therefore, you can directly speak to us regarding any further queries. However, we also provide free Demat account on very low brokerage charges for trading in futures. It’s our pleasure to resolve, even all the key issue for the effective online trading.