Select Language Hindi Marathi Gujarati. Get Quote. It is available through RSS feed reader or through some browsers.
It will show you what's new since the last time you checked the feed, without having to visit the website. How to Subscribe this feed? Download any online RSS reader of your choice. Stock Futures. What are Stock Futures? How are Stock Futures priced? On the day of maturity, if the price of potatoes falls below that level, the farmer successfully hedged his position to minimise the overall risk associated with trading in the future.
However, in case of a price rise in the potato market, a farmer stands to lose out on profits. Such losses can be offset through a put option contract, which gives the farmer a right but not an obligation to meet the conditions of a contract.
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Price rise on the other hand, allows the farmer to withdraw from the contract and sell the items in the marketplace at the prevailing price. Hedgers primarily opt for physical trade wherein the asset is exchanged upon maturity of the contract. It is particularly popular in the commodity market, wherein physical trade is undertaken by producers and companies to keep the cost of raw materials at a fixed level.
It ensures stability in the price levels in an economy. Speculators predict the direction of price movement in a market as per an intrinsic valuation and economic condition and choose to take an opposite stance in the present to gain from such price fluctuations. Subsequently, a long position is undertaken by individuals expecting the prices to fall in the future as per their market analysis.
Investors plan on buying securities in the future at a reduced price through such contracts, to profit in relative terms. Most speculators engaging in derivatives trading aim to opt for cash settlement, wherein the physical transfer of an asset is not conducted. On the contrary, a difference between spot price current market price and the price quoted to the derivative is settled between two parties, thereby reducing the hassles of such trade.
Arbitrageurs aim to profit from price differences in the market, which arise due to market imperfections. A price quoted in futures and options trading includes the current price and cost of carry, along with an underlying assumption that a strike price matches the contractual price. Any price difference arises from carrying the underlying security to the future date, known as the cost of carry.
Arbitrageurs essentially remove all price differences arising from imperfect trading conditions, as they change the demand and supply patterns to arrive at equilibrium. Futures and options trading is widely practised on leverage, wherein the entire cost of trading does not have to be paid upfront. Can I buy a future at p. If I buy a future contract at p. RR Aug 17, 1 Reply 0. Ramakant Vyas Apr 19, Reply 0.
Manas Sahoo Jan 25, Reply 0. Hello, Beautifully Explained. But one small clarification required as some one already asked it also above.
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Team Chittorgarh. As in your example the value of trader is Rs 3,81, Hope this help.
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So how much you loose. Abhishek Verma Dec 19, 0. Prateek Jun 15, Reply 0. Good explanation. But I have a doubt. If you check out the zerodha brokerage calculator since you are using zerodha, Buy - How did u get Administrator Nov 23, 0. This is because we closed the position in 7 days. Its like a new trade every day for 7 consecutive trading sessions. Check the table above where we calculated Net Profit of Rs Prakash Purandare Sep 6, Reply 0. Manickam Veeramuthu Sep 6, Reply 0.
Chandan sinha Aug 28, Reply 0. Dillip Aug 13, Reply 0. Y V R Jul 28, Reply 0. Rejeev Shamsudeen Jun 3, Reply 0. The For example; first day the broker will deduct Rs Beautifully explained. GTC are limit orders where you could decide the price and let the order in the system for few months. If the price reaches, the order get processed. Note that only few brokers provide GTC facility.
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Bond Mar 8, Reply 0. Rohit Pareek Feb 1, Reply 0. Very useful article. Thank you very much for making it simple and easy. Rajan Dec 9, Reply 0. Suppose I have shares of Reliance in my account.
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I would like to know through the accounting entries how i can make monety selling futures. Please illustrate with accounting entries. Thank you. Bijoy Dec 6, Reply 0. Arti Nov 2, Reply 0. Vijay Sep 29, Reply 0. Everything was well explained but one. Ashok Kumar Dhabhai Sep 2, 1 Reply 0. Dera Mr Sathi, Thanx for explaining the future trading in such a simple but effective methods. The examples given has cleared all doubts. Will be kind enough to cover option trading Put and call options , implications and meaning of terms like open interest.
Regards Ashok kumar Dhabai. Unni Neithilath Jul 31, Reply 0. Madhuri Jul 27, Reply 0. Nicely explained. Thanks for information. Gopal A Jun 21, Reply 0. How Marin Maintenance is calculated? Spectacular, Only an learned team or a person could write in so simple words about the complex thing.
Wonderfully laid-out with good examples. Thanking You. Happy Trading.