#TRADING OPTIONS FULL#

These are determined by the exchange on which the assets are traded.

Strike Price Intervals: These are the different strike prices at which an options contract can be traded.

Strike Price / Exercise Price: The pre-decided price at which the asset can be bought or sold.

Premium: The upfront payment made by the buyer to the seller to enjoy the privileges of an option contract.

To know about the jargons related to Futures, click here.

Here are some Options-related jargons you should know about. When you are trading in the derivatives segment, you will come across many terms that may seem alien. If you’re trading in NSE, you have the option of VIX Futures that can help you quantify the volatility of the market. The transactions are merely recorded in the stock exchange through which they are routed. There is no physical exchange of documents at the time of entering into an options contract.

Unlike the buyer in an options contract, the seller has no rights and must sell the assets at the agreed price if the buyer chooses to execute the options contract on or before the agreed date, in exchange for an upfront payment from the buyer. The seller of an options contract is called the ‘options writer’. Just as futures contracts minimize risks for buyers by setting a pre-determined future price for an underlying asset, options contracts do the same however, without the obligation to buy that exists in a futures contract. You can read up these 5 ways to hedge against a small-cap crash. It calls for a good understanding of trading and investment practices as well as constant monitoring of market fluctuations to protect against losses. Though they have their advantages, options trading is more complex than trading in regular shares. Here’s what Financial planning is and why it important. One of the integral parts of hedging yourself against market fluctuations is to do financial planning.

Hedging : They can also be used to protect yourself from fluctuations in the price of a share and letting you buy or sell the shares at a pre-determined price for a specified period of time.

You get control over the shares without buying them outright.

#TRADING OPTIONS FULL#

Leverage:Options trading help you profit from changes in share prices without putting down the full price of the share.The right to buy a security is known as ‘Call’, while the right to sell is called ‘Put’. In the same way, options trading can restrict your losses if the price of the security goes down, which is known as hedging. That’s because you don’t have to pay the full price for the security in an options contract. While it is a little more complex than stock trading, options can help you make relatively larger profits if the price of the security goes up. This type of trading also gives buyers the flexibility to not buy the security at the specified price or date. at a specific price within a specific date. Options trading allows you to buy or sell stocks, ETFs etc.

Trading options