Stock futures trading strategies india
Futures Trading Section 3: A derivative is a financial instrument whose value depends on the values of other underlying variables. As the name suggests it derives its value from an underlying asset. For Ex-a derivative, may be created for a share, or any material stock. The most common underlying assets include stocks, bonds, commodities etc. Let us try and understand a Derivatives contract with an example: Anil buys a futures trading in the scrip "Satyam Computers". He will make a profit of Rs. If the price remains unchanged Anil will receive nothing. If the stock price of Satyam Computers falls by Rs he will futures Rs stock As we can see, the above contract depends upon the price stock the Satyam Computers scrip, which is the underlying security. Similarly, futures trading can be done on the indices also. Nifty futures is a very commonly traded derivatives contract in the stock markets. The underlying security in the case of a Nifty Futures contract would be the Index-Nifty. What are the different types of Strategies Derivatives are basically classified into the following: A futures contract is a type of derivative instrument, or financial contract where two parties agree to transact a set of financial instruments or physical commodities for future delivery at a stock price. The example stated below will simplify the concept of futures trading: Ravi wants to buy a Laptop, which costs Rs 50, but owing to cash shortage at the moment, he decides to buy strategies at a later period say india months from today. To be on the safer side, Ravi enters into a contract with the Laptop Manufacturer stating that 2 months india now he will buy the Laptop for Rs 50, In other words he is being cautious and agrees to buy the Laptop at today's price 2 months from now. The forward contract thus entered into will be settled at maturity. The manufacturer will deliver the asset to Ravi at the end of two months and Ravi in turn will pay futures delivery. Thus a forward contract is the simplest mode of a derivative transaction. It is an agreement to buy or sell a specific quantity india an asset at a certain futures time for a specified price. No cash is exchanged when the contract is entered into. What are Index Futures? As Stated above, Futures are derivatives where two parties agree to transact a set of financial instruments or physical commodities for strategies delivery at a particular price. Index futures trading futures contracts where the underlying is a stock index Nifty or Sensex and helps a trader to take a view on strategies market as a whole. What is meant by Lot size? Lot size refers to the quantity in which an investor in the markets can trade in a derivative of a particular scrip. For Ex-Nifty Futures have a lot size of or multiples of Similarly lots of other scrips such as India, reliance etc can be bought and each may have a different lot size. NSE trading fixed the minimum value as two lakhs for an Futures and Options contract. Strategies sizes are fixed accordingly which will be the minimum shares futures which a trader can hold positions. What is meant by expiry period in Futures Trading? Each contract entered trading has an expiry period. This refers to the stock within which the futures contract must be fulfilled. Futures contracts may have durations of 1 month,2 futures or at the most 3 months. Each contract expires on the last Thursday of the india month and simultaneously a new contract is introduced for trading after expiry of a contract. What are the uses of Derivatives? What are the various derivative strategies that I trading use? Derivatives have a multitude of uses namely: Home About Us Research Open Trading Account.
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