Derivatives Guide
Step into the world of derivatives trading, where contracts are tied to the value of underlying assets. This section is your gateway to understanding futures, options, and more—everything you require to navigate the realm of derivatives trading is right here.
Derivatives Market
Understanding Derivatives: A Guide to Risk Management and Portfolio Growth The derivatives market plays a pivotal role in the financial landscape, offering various instruments that enable investors to manage risk, speculate on future price movements and enhance portfolio performance. As financial tools that can be tailored to meet specific needs, they have become essential in […]
Read More >What are Swap Derivatives?
Navigating the World of Swaps Derivatives: A Comprehensive Guide Swaps, a fundamental term in the financial derivatives market , are essential tools for managing financial risks. Understanding what is swaps derivatives are is key for investors and financial professionals alike. These instruments allow for exchanging cash flows or other financial assets between parties, typically to […]
Read More >What are Inflation Derivatives?
Inflation Derivatives : Everything You Need to Know Inflation derivatives, inflation-indexed or inflation-linked swaps, are contracts between two parties that transfer inflation risk from one party. While traditional financial instruments such as stocks, bonds, and commodities are more commonly known, inflation derivatives offer a unique opportunity for investors to hedge against inflation and protect their […]
Read More >What are Equity Derivatives?
Understanding Equity Derivatives: A Complete Guide Equity derivatives are widely used by investors, financial institutions, and corporations to manage risk, hedge against market fluctuations, and amplify potential returns. However, they have also been criticised and controversial, particularly in the aftermath of the 2008 financial crisis. This post will discuss the details of equity derivatives, exploring […]
Read More >Premium in Derivatives
Understanding Premium in Derivatives: A Comprehensive Guide mechanism to hedge, speculate, or secure arbitrage opportunities. At the heart of derivatives trading lies the concept of “premiums,” a multifaceted topic that warrants a closer examination. This blog post aims to examine the nature of premiums in derivatives. Read on to learn more!! What is a Premium […]
Read More >Exchange-Traded Derivatives (ETD)
What are Exchange-Traded Derivatives (ETD)? Exchange-traded derivatives allow investors to hedge risk, speculate on market movements, and diversify their portfolios. They are employed by a wide range of market participants, including institutional investors, banks, and individual traders, making them an integral part of the global financial ecosystem. However, with their complex nature and potential for […]
Read More >Cost of Carry
What is the Cost of Carry? The financial domain is filled with complex terms and jargon, making it challenging for individuals to fully understand the various concepts and strategies used in the market. One term that may leave many puzzled is the “cost of carry.” This term is often used in the commodities market and […]
Read More >ITM Call Options Strategies
Understanding ITM Call Options Strategies ITM call options play a crucial role in options trading, allowing investors to maximise returns. With their intrinsic value, these options allow investors to capitalise on favourable market conditions. Understanding the distinction between ITM and OTM call options is also essential for making informed investment decisions and optimising risk-reward ratios. […]
Read More >Out-of-the-Money (OTM)
Understanding the Concept of Out-of-the-Money (OTM) Options in Finance Out of the Money is a commonly used phrase in finance, but its meaning goes beyond being accurate or precise. In fact, it has become a popular term in various industries, from share market to business strategy. But what exactly is OTM, and why has it […]
Read More >What is an Options Contract?
Options Contracts Explained: Types, Uses, Pros, and Cons Most beginners in the investment sector start with stock trading. It is because many of them do not know about derivatives, commodities, currencies, and other financial instruments. Derivatives are financial contracts that can help investors speculate on future price movements of underlying securities. Experienced investors often prefer […]
Read More >What is a Chooser Option?
Chooser Options: Flexibility in Derivatives Trading Derivatives traders must be aware of different types of futures and options in the market. When it comes to options, most of us know about the call and put options. Besides these options, investors can trade chooser options to make a profit. Continue reading to understand more about it. What […]
Read More >What is a Call Option?
Understanding the Call Option: The Basics of Financial Contracts Besides trading assets like stocks and commodities, investors also indulge in derivatives trading. Derivatives trading can help with diversification, speculation, price discovery, and risk management. You might know that futures and options are the popular derivatives traded in different markets. However, very few investors understand the […]
Read More >Gold Future Trading
Gold Future Trading: What to Know Gold has been a highly coveted and valuable commodity for centuries, and its allure as an investment has only grown in recent years. With its ability to hedge against inflation and uncertainty in the global economy, gold futures investing has become popular for traders looking to diversify their portfolios. […]
Read More >What are Exotic Options?
Exotic Options: Defination, Types & Differences Exotic, non-standard, or complex options in option trading offer unique and specialised features beyond the basic “vanilla” options commonly traded on major exchanges. While traditional options give investors the right to buy or sell an underlying asset at a specified price and time, exotic options offer a wider range […]
Read More >What is a Spot Commodity?
Understanding Spot Commodity: Key Features and Functions Spot commodities hold a unique position among the various types of commodities due to their immediate availability for delivery and settlement. Understanding the features and functions of spot commodities is essential for investors, traders, and businesses looking to diversify their portfolios or hedge against price fluctuations. This guide […]
Read More >10 Things That Every Options Trader Must Know
Buying Options -10 Things That Every Options Trader Must Know Options trading can be a powerful tool for stock traders. It offers the potential for high rewards but also brings unique risks and complexities. Whether you’re a seasoned trader or a financial novice, understanding these ten critical aspects of buying options is essential for cultivating […]
Read More >What are Weekly Options?
What are Weekly Options? One of the most common questions traders and investors ask is what are weekly options and how they differ from traditional options. This guide will explore their fundamentals, unique characteristics, and the potential benefits and risks of trading them. Whether you are a seasoned investor or just starting to dip your […]
Read More >What are Bond Futures?
What are Bond Futures? Bond futures are a key component of the global financial market, yet many investors still have limited knowledge and understanding of this complex financial instrument. This guide will provide a thorough overview of how bond futures work and equip investors with the necessary knowledge to make informed decisions regarding incorporating them […]
Read More >Forex Options Trading
Understanding Forex Options Trading Forex, or foreign exchange or currency trading, is the world’s largest and most liquid financial market. While the traditional way of trading forex involves buying and selling currencies directly, there is another avenue for traders to explore – forex options. These options, also known as currency options or FX options trading, […]
Read More >Rollback Trading Strategy
Understanding the Rollback Trading Strategy: A Comprehensive Guide The rollback trading strategy involves identifying and capitalising on market trends that reverse or “rollback” after a significant price movement. Today, we will discuss the fundamentals of the rollback trading strategy, its benefits, and potential drawbacks. Further, we will explore real-world examples and practical tips for successfully […]
Read More >What is a Basket Option?
Understanding Basket Options: A Comprehensive Guide Basket options have become integral to the investment landscape, allowing investors to diversify their portfolios and manage risk effectively. By using these options, investors can capitalise on the collective performance of multiple assets, providing them with increased flexibility and potential for profit. This innovative investment instrument offers various benefits, […]
Read More >Up-and-Out Options
Understanding Up-and-Out Options: A Strategic Guide for Traders An up-and-out option, with its unique structure and potential for high returns, has become a sought-after investment vehicle for those looking to diversify their portfolio and manage risk. This guide will dive into up-and-out option strategy, how it works, and why it has become a popular choice […]
Read More >What is a Gold Option?
Understanding Gold Options: A Trader’s Guide to Precious Metals Gold has long been considered a valuable and sought-after commodity, with its allure dating back to ancient civilisations. In today’s modern financial industry, gold remains prominent as a safe-haven asset and a diversification tool. However, with the rise of derivatives trading, investors now have a new […]
Read More >What are Balloon Options?
Balloon Options: An Innovative Financial Instrument There has been a significant increase in the use of balloon options in recent years, with companies and individuals alike turning to this financial tool for various purposes. But what exactly are balloon options in options trading, and how do they work? In this post, we will dive deeper […]
Read More >Gamma in Options Trading
Understanding the Meaning of Gamma in Options Trading You already know that an options contract allows the holder to buy/sell the underlying asset at a predetermined price, also called the strike price. Options traders must be familiar with delta, gamma, and other factors. These factors can help understand the pricing of options in the market. […]
Read More >Zero-Days-To-Expiration (0DTE)
Understanding Zero-Days-To-Expiration (0DTE) Options in Trading Zero-Days-To-Expiration (0DTE) options, also known as “same-day” or “day-of” options, have a unique characteristic that sets them apart from traditional options. However, with its unique nature, there are various factors that traders must consider before incorporating 0DTE options into their trading strategies. This guide will explore 0DTE options, what […]
Read More >10 Tips to Keep in Mind While Selling Options
10 Tips to Keep in Mind While Selling Options Options trading requires a nuanced understanding of strategies, risks, and market behaviour. For those venturing into the selling options, there’s a strategic depth that, when navigated wisely, can lead to significant gains. Below, we delve into ten crucial points to remember when you sell options. What […]
Read More >What is the VIX Option?
Introducing the VIX Options Volatility has always been a key aspect of finance and investment. Risk and uncertainty have greatly influenced the decisions made by investors and traders. Financial markets have developed various tools and instruments to better understand and manage this volatility. One such tool is the VIX option, the CBOE Volatility Index option. […]
Read More >Long Straddle in Options Trading
Understanding the Long Straddle in Options Trading In financial markets, options trading represents one of the most versatile and dynamic investment strategies. Among the many options trading positions, the long straddle stands out as a powerful tool for speculators and risk managers. This detailed guide discusses what long straddle is, how it works, and when […]
Read More >Expiry Day Option Buying Strategy
Understanding Expiry Day Option Buying Strategy Options trading offers possibilities for those with the stomach for risk and the skill to navigate complex financial markets. Among the myriad strategies available, the focus is on the ‘expiry day option buying strategy.’ This approach demands understanding the complexities of the options market and the ability to act […]
Read More >What is a Stock Option?
What are stock options & how do they work? Stock options are a powerful financial instrument that provides investors with flexibility and potential profit opportunities beyond traditional stock trading. Understanding how stock options work requires a grasp of various factors such as strike price, expiration date, and option type. While they can offer significant rewards, […]
Read More >What is a Barrier Option?
Understanding Barrier Options: A Guide for Traders and Investors Barrier options, also known as knock-in or knock-out options, are a type of exotic option that derive their value from the underlying asset’s ability to reach a specified barrier level. These options stand out in the options market due to their distinctive feature of having the […]
Read More >Quantity-Adjusting Options
Quantity-Adjusting Options: Mitigating Currency Risks in Financial Markets When the high tides and low tides of the financial market are encountered, specialised tools for investors and traders come into play – and “quanto options” are one such tool. This detailed guide sheds light on what a quantity-adjusting option is, the types, the underlying benefits, the […]
Read More >Volatility Skew in Options Trading
Volatility Skew in Options Trading: Insights & Applications In financial markets, understanding risk is fundamental. Volatility skew is an intricate phenomenon that reflects the intricacies of risk perception and evaluation in options trading. It is a complex yet significant aspect of options trading that reflects the differing implied volatility levels across various strike prices or […]
Read More >What is Delta in Options?
Options Delta: Navigating Risk and Strategies Options Delta is a key metric in options trading, offering valuable insights into the relationship between an option’s price and the underlying asset’s price movements. As a measure of an option’s price sensitivity concerning changes in the underlying asset’s price, Delta plays a pivotal role in assessing risk, determining […]
Read More >Call Ratio Backspread
Everything to Know About Call Ratio Backspread The call ratio backspread strategy in options trading offers traders a unique way to capitalise on market volatility. Understanding its mechanics and nuances can significantly enhance one’s trading arsenal, providing increased profits and risk management opportunities. This post discusses the call ratio backspread strategy, one of the most […]
Read More >What is Put Writing?
Understanding Put Writing in the Indian Financial Market Put writing is a popular and effective technique in options trading, particularly in the Indian financial market. This involves selling put options on underlying assets, allowing investors to profit from the premiums received. Covered put writing, where the investor holds the underlying asset, can provide downside protection […]
Read More >What is a Futures Contract?
Futures Contract – A Complete Guide for Traders Futures contracts, with their complex workings and potential for substantial gains or losses, play a vital role in the dynamic world of trading. By understanding the futures contract’s meaning, traders gain access to a powerful tool that allows them to speculate on the future price of various […]
Read More >Straddle Options Strategy
Understanding the Straddle Options Strategy: A Comprehensive Guide The straddle option strategy is a versatile trading strategy that investors and traders use to capitalize on expected volatility in the underlying asset’s price. This strategy is considered a neutral strategy, as it does not rely on the market moving in a specific direction. Understanding the dynamics […]
Read More >Strangle Option Strategy
Understanding the Strangle Option Strategy in Options Trading The strangle option strategy is a popular and versatile trading approach used in the financial markets, particularly in options trading. This strategy allows traders to profit from significant price movements in the underlying asset, regardless of whether it moves up or down. In this guide, we will […]
Read More >Put Selling Options
A Detailed Guide to Put Selling Options In options trading strategies, selling put options is popular among investors. This strategy involves selling a put option, granting the buyer the right to sell the underlying asset at a predetermined price within a specific timeframe. Understanding the details of these options is crucial for investors seeking to […]
Read More >Bear Call Spread
Understanding the Bear Call Spread Strategy in Option Trading. Bearish investors often look for ways to minimize risks and earn some returns. They usually make benefits expecting that the market price will dip. Options traders with a bearish attitude can use the technique to earn returns. It is the perfect strategy when you expect a […]
Read More >What is an Option Premium?
Understanding Option Premium: A Comprehensive Guide Options are flexible financial contracts that do not obligate the holder to take an action. Investors selling or writing off options often depend on the premium income. Investors also consider the option premium before making a decision, as it is a major cost in options trading. Before understanding the […]
Read More >Over The Counter
Demystifying OTC (Over-the-Counter) Markets for Investors Where do you find stocks of influential companies, derivatives, commodities, bonds, and other securities? Most of you might think a stock exchange is the only place to find these securities. Besides stock exchanges, you can find some unlisted and less popular securities in OTC markets. An over the counter […]
Read More >What are Options?
What are Options in the Stock Market? Beginners in the stock market often start their journey with stocks, mutual funds, and ETFs. They might pay less attention to other financial instruments that might lead to portfolio diversification. Derivatives are popular among experienced investors for hedging, price speculation, good returns, diversification, and other reasons. You can […]
Read More >Black Scholes Model
The Black Scholes Model in India: An Essential Guide for Financial Analysts Discover the Black Scholes Model’s meaning and the application of this influential financial formula that revolutionised options pricing. Understand its significance in valuing financial derivatives and help you grasp the essentials of risk management. This guide will navigate this model, emphasising its role […]
Read More >What is a Put Option?
Understand Put Options in India: A Detailed Guide for Traders Put options are a type of financial derivative that grants the holder the right, but not the obligation, to sell an underlying asset at a predetermined price within a specified period. What is a Put Option? They are commonly used in investment and trading to […]
Read More >What is Option Pricing?
Options Pricing – A Guide for Traders and Investors Options pricing is often considered to be complex and confusing. Many investors and traders shy away from options due to their perceived difficulty in understanding and calculating. So, in this post, we will clearly understand what is options pricing and break down the key concepts and […]
Read More >What are Option Greeks?
Option Greeks Demystified: Essential Guide for Options Traders Option Greeks, in the context of options trading, are essential analytical tools that help investors and traders assess and manage the risk and potential profitability of their options positions. Understanding what are option Greeks, their meaning, and the formulas behind them is crucial for making informed decisions […]
Read More >Fear and Greed Index
Understanding the Fear and Greed Index As investors, we are often driven by the twin emotions of fear and greed, which can greatly impact our decision-making process. To deal with this volatile landscape, it is important to have a solid understanding of how these emotions can affect the market. This is where the Fear and […]
Read More >What is the Iron Condor?
Understanding Iron Condor & it’s Strategy Options trading can be complex, with many strategies to choose from. One such strategy that stands out is the Iron Condor. If you’re curious about how it works and why traders value it, we will dive deep into the details of the Iron Condor and its role in options […]
Read More >What is a Currency Option
Understanding Currency Options: Trade in Forex Options Currency options are a useful tool in the trading world. They help traders protect against the risk of changing currency values. At the same time, they offer a chance to profit from these changes. In this guild, we will give a detailed look at currency options. What is […]
Read More >What are Index Futures?
Index Futures – Meaning, Types & How it Works Welcome to your comprehensive guide to exploring the exciting world of index futures. In this dynamic realm of online trading, index futures play a crucial role, offering a myriad of opportunities and challenges for investors. Let us explore more about this concept and a vital investment […]
Read More >Mastering Copper Futures in India: A Complete Trader’s Guide
Futures Contract – A Complete Guide for Traders Futures contracts, with their complex workings and potential for substantial gains or losses, play a vital role in the dynamic world of trading. By understanding the futures contract’s meaning, traders gain access to a powerful tool that allows them to speculate on the future price of various […]
Read More >What is Day Trading?
Day Trading Uncovered: A Beginner’s Guide Day trading, a term often associated with the fast-paced finance industry, refers to the practice of buying and selling financial instruments within the same trading day. It is a dynamic and potentially lucrative strategy that attracts seasoned traders and newcomers looking to capitalise on market fluctuations. In this detailed […]
Read More >What is Open Interest?
Mastering Open Interest in Trading: A Comprehensive Guide Open interest is a commonly used term in finance and investments, yet many often misunderstand or overlook it. It is a critical indicator of market sentiment and can provide valuable insights into a particular asset’s supply and demand dynamics. Let’s delve deeper into the concept, explaining its […]
Read More >Collar Options Strategy
Collar Options Strategy: Essential Guide for Beginners in India The collar option strategy is a popular and effective approach in options trading strategies, providing investors with a way to protect their investments while benefiting from potential gains. The strategy combines the purchase of a protective put option with the sale of a covered call option, […]
Read More >What is the Bermuda Option?
Unlocking Bermuda Options: An In-Depth Guide for Investors Bermuda Options, a type of financial derivative, offers a unique and versatile approach to investment strategies. These options allow investors to exercise their rights at predetermined dates, distinguishing them from traditional European or American options. With Bermuda call options and put options, investors can strategically optimise their […]
Read More >Credit Default Swaps (CDS)
Credit Default Swaps (CDS): An Essential Guide for Financial Professionals Credit default swaps (CDS) have become a significant financial derivative tool within the Indian financial market. As attention turns toward comprehending intricate trading strategies, a fundamental grasp of CDS concepts proves crucial. These instruments play a pivotal role in safeguarding investors against potential credit defaults, […]
Read More >Buying Put Options
Buying Put Options – A Complete Guide to Buying Strategies and Risks Put options play a crucial role in investment portfolios, offering investors a unique strategy to protect against potential downturns in the market. As financial derivatives, it provides the right, but not the obligation, to sell an underlying asset at a predetermined price within […]
Read More >What are American Options?
Understanding the American Options: A Comprehensive Guide American options, including American call options and American put options, are vital tools in trading and investment strategies. These options allow investors to exercise their rights at any time before the option’s expiration date. Unlike European options, which can only be exercised at expiration, American ones allow traders […]
Read More >What Is a Cash Market?
Understanding the Cash Market: An Essential Guide for Investors The cash market serves as a platform for the buying and selling of financial instruments with immediate settlement. Unlike futures markets, where contracts are traded for future delivery, its transactions involve the exchange of actual assets or securities. This guide provides: A comprehensive understanding of the […]
Read More >Bullish Options Strategies
Understanding Bullish Options Strategies: A Comprehensive Guide A bullish option strategy is crucial in options trading strategies and financial derivatives. These strategies are designed to take advantage of a rising market, offering traders the potential for significant profits. By utilising these strategies, traders can capitalise on upward price movements in stocks, indexes, or other assets. […]
Read More >Call Ratio Spread Strategy
Understand the Call Ratio Spread Strategy in Options Trading A Call Ratio Spread is a popular options trading strategy investors use to capitalize on specific market scenarios. This strategy involves a combination of call options with varying strike prices and aims to achieve particular risk-reward outcomes. Understanding and implementing a Call Ratio Spread requires a […]
Read More >What is Implied Volatility?
Understanding Implied Volatility: A Comprehensive Guide You might be familiar with historical market volatility, which helps us understand the price fluctuations of a security during a specific time period. However, historical volatility would not always be the right measure when predicting price fluctuations. Herein, Implied Volatility (IV) is useful to understand the future volatility associated […]
Read More >Bull Put Spread
Understanding Bull Put Spread in Trading: A Comprehensive Guide Derivatives are preferred by many for portfolio diversification, hedging, risk mitigation, speculation, and other reasons. While you can buy and sell futures and options, there is also room for spreading. You can buy/sell multiple contracts simultaneously to earn from the price spreads. A bull put spread […]
Read More >Bear Put Spread
Understanding the Bear Put Spread Strategy: A Complete Guide Options traders use different investment strategies to earn guaranteed returns. The bear put spread strategy is common among options investors. It helps investors minimize risks when the price of an asset plummets in the market. The best part about this strategy is that you can earn […]
Read More >What is the Swap Market?
SWAPs Unveiled: An In-Depth Guide to Understanding SWAPs in Finance SWAPs are complex yet indispensable instruments in modern finance. They play a critical role in hedging risk and optimising financial portfolios. In this comprehensive guide, we will discuss what is a SWAP, exploring the SWAP meaning, market dynamics, and the significant impact they have in […]
Read More >What is a Forward Contract?
Forward Contract: An Essential Guide for Investors and Traders Forward contracts are required in the Indian financial market, offering participants a valuable tool for managing risk and securing future transactions. These derivatives contracts allow parties to agree on the purchase or sale of a specific asset at a predetermined price and date, providing stability and […]
Read More >Contract for Differences (CFDs)
Contract for Differences (CFDs): An In-Depth Guide for Traders Contracts for Differences, commonly known as CFDs, have emerged as a highly sought-after financial derivative product in today’s markets. With their flexibility and potential for high returns, CFDs have attracted traders’ attention worldwide. So, let’s discover the answer to what contracts for differences are, exploring their […]
Read More >Put Call Ratio (PCR)
Put Call Ratio (PCR) The Put Call Ratio is a significant indicator in the world of options trading. It provides valuable insights into market sentiment and can assist traders and investors in making informed decisions. In this guide, we’ll delve into all aspects of the Put Call Ratio, its importance, and how it’s calculated, helping […]
Read More >What is a Short Put Option?
All You Need to Know About the Short Put Option Short put options are preferred by many investors to sell at premiums and make a profit. Sellers of put options can make profits when the price of the underlying asset rises or remains the same during the given tenure. Selling short put options is a […]
Read More >What is a Covered Call ?
Understanding the Covered Call Strategy in Trading Investors often take long positions in the market by purchasing different assets. However, there is also a risk of downside price movement in the future. Seasoned investors often use call options to offset the potential losses while taking long positions. The covered call strategy is not complex like […]
Read More >Buying Call Options
Buying Call Options: Everything to Know Call options are a fundamental component of options trading strategies, allowing traders to profit from price movements in various financial derivatives. By understanding the concept of buying call options, investors gain a powerful tool to potentially increase their returns and manage risk effectively. This guide will dive deeper, exploring […]
Read More >What is Margin Money?
Understanding the Concept of Margin Money in Trading Margin Money: Investors don’t want to let go of investment opportunities, as they can help earn high returns. Taking market positions can be challenging when there is a lack of funds. Luckily, investors can avail of the margin trading facility and borrow funds from stockbrokers. Before you […]
Read More >Embedded Derivatives
Embedded Derivatives You might have come across several non-financial agreements. These agreements between two parties usually do not involve financial instruments. You can find embedded derivatives within such contracts. These derivatives are found within host contracts but act similar to traditional derivatives. Continue reading to understand what embedded derivatives are in this blog. What are […]
Read More >
