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in stock market i find the term futures and options ? what
was the meaning of that sensex futures and options
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Answer Posted / zia
OPTION:
1)A CALL OPTION is a financial contract between two
parties, the buyer and the seller of this type of option.
Often it is simply labeled a "call". The buyer of the
option has the right, but not the obligation to buy an
agreed quantity of a particular commodity or financial
instrument (the underlying instrument) from the seller of
the option at a certain time (the expiration date) for a
certain price (the strike price). The seller (or "writer")
is obligated to sell the commodity or financial instrument
should the buyer so decide. The buyer pays a fee (called a
premium) for this right.
2)A PUT OPTION (sometimes simply called a "put") is a
financial contract between two parties, the buyer and the
writer (seller) of the option. The put allows the buyer the
right but not the obligation to sell a commodity or
financial instrument (the underlying instrument) to the
writer (seller) of the option at a certain time for a
certain price (the strike price). The writer (seller) has
the obligation to purchase the underlying asset at that
strike price, if the buyer exercises the option.
FUTURE:
A contract to buy or sell a specified amount of a commodity
or financial instrument at an agreed price at a set date in
the future. If the price for the commodity or financial
instrument rises between the contract date and the future
date, the investor will make money; if it declines, the
investor will lose money. The term also refers to the
market for such contracts.
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