123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Investing---Finance >> View Article

A Guide On Futures And Options

Profile Picture
By Author: Maithili Pawar
Total Articles: 31
Comment this article
Facebook ShareTwitter ShareGoogle+ ShareTwitter Share

If there's one thing about finance and commodity markets that's certain, it's price shifts. Prices continually change. In reaction to different factors, they will go up and down, including the state of the economy, the environment, agricultural production, election results, coups, wars and government policies.

Of course, those that trade in these markets will be worried about price volatility because price shifts can mean losses – or income. They are resorting to derivatives like futures and options to protect themselves.
A derivative is a contract that derives its value from the underlying assets; it may include securities, goods, currency, etc.

So, what is future and option trading? One type of derivative is the futures.
In this kind of contract, a buyer (or seller) agrees to buy (or sell) a certain quantity of a particular asset, at a certain price at a future date.

Futures help evade the risk of price instabilities. A country that trades in oil, for instance, will buy oil futures to protect itself from price rises in the future. Similarly, farmers will fix their products using futures so that they do not have to face the risk of a decrease in prices when they are ready to sell their harvest.

What is options?

The options contract is another type of derivative. It is a bit different from a futures contract in that it offers a buyer (or seller) the right, but not the obligation, to purchase (or sell) a commodity at a certain fixed date at a certain price. Two types of options are available: the call option and the put option. A call option is a contract which gives the buyer the right, but not the obligation, to purchase a particular asset on a specific date at a specified price. A margin calculator will help you know the difference.

The put option is another form of option. For the future, you will sell properties at a negotiated price under this form of contract but not the obligation. One benefit of futures and options is that they can be exchanged openly on various exchanges. When thinking about what is F&O trading, knowing that you can do so without taking ownership of the underlying asset is important. Knowing what futures and options are, is significant, as they play a critical financial role in the world. They help to hedge against volatility in prices and maintain stable markets.


Author Bio: Author bio: Maithili Pawar is a financial expert with 5 years of experience in the investment banking field. In her free time, she writes on trading topics. In this, she has given an overview of what is F&O

Total Views: 103Word Count: 434See All articles From Author

Add Comment

Investing / Finance Articles

1. Sec Makes Ico Token Sales More Inclusive, Not Enough For Sec Commissioner Hester Peirce
Author: cbw,cryptocurrency

2. A Few Smart Ways To Boost Your Credit Score
Author: Asap Credit Solution

3. Small Business Guide To Growth And Accurate Taxation
Author: Prestige Accounting Solutions

4. Bitcoin, Bitcoin Gold, And Bitcoin Cash, What's The Difference?
Author: Taqi Ahmed

5. Wholesale Price Index Expected To Surge 0.66 Percent
Author: Stock Investor

6. Value Creation At This Time Is A Big Deal
Author: Stock Investor

7. How To Balance Your Daily Expenses When Paycheck Is Behind?
Author: Branden Whittington

8. Overdraft Changes 2020: Which Ones Are Getting More Expensive?
Author: Lauren Robson

9. Find Best Deals In Bad Credit Car Loans In Melbourne
Author: Centreline Finance

10. Accounting Rules That Should Be Know You
Author: petterson bennett

11. Beginners Guide For Forex Trading In Thailand
Author: Taqi Ahmed

12. Some Of The Most Frequently Asked Questions About Business Loans
Author: Alpa

13. Nigeria Credit Cards
Author: o3cardsseo

14. What Is Forex ?
Author: andrian chase

15. Arrangement Of An Audit Of Personnel Records At The Enterprise
Author: Petterson Bennett

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: