Derivatives

Equity and derivatives are two different types of financial instruments. Equity represents ownership in a company, while derivatives are contracts that derive their value from an underlying asset, such as a stock, bond, or commodity.

Call and put options are two of the most common types of options contracts. A call option gives the holder the right, but not the obligation, to buy a specified asset at a specified price on or before a specified date. A put option gives the holder the right, but not the obligation, to sell a specified asset at a specified price on or before a specified date. Importantly, these rights do not require buying or selling the underlying asset at a pre-decided price within a specific timeframe. Read on to learn more about them.

You may have noticed that at the end of every month, the stock market becomes more volatile. News reports often say this is because of 'derivative expiry'. It sounds vague and unclear as to how the derivatives market affects stock prices and indices.

Read the article to understand the difference between how can you better understand the difference between the pricing structure in spot and future pricing

Options trading allows you to buy or sell stocks, ETFs, etc. at a specific price within a specific date. This type of trading also gives buyers the flexibility to not buy the security at the specified price or date. Options trading is a little more complex than stock trading. However, it can help you make relatively larger profits if the price of the security goes up. That’s because you don’t have to pay the full price for the security in an options contract. In the same way, options trading can restrict your losses if the price of the security goes down. Understand what is option trading and how to trade in options. Also, read about options trading related terms, its types etc.

The world of derivatives – is considered one of the most complex financial instruments. In this article, we decode the derivative market for you. Like its counterparts abroad, the derivative market in India is increasingly gaining significance. Since derivatives were introduced in 2000, their popularity has grown manifold.

Put options are commonly used as a hedging tool against potential losses in the underlying asset or as a way to profit from a decrease in the asset's value. The price of a put option is affected by factors such as the price of the underlying asset, the strike price, time until expiration, and market volatility. Read this article to better understand how put options work.

The unique Max Pain theory explores the dynamics of price changes as options get closer to expiration. It is a curious phenomenon that appears at the point in time when the majority of option traders experience the greatest level of financial hardship. In order to reduce their losses when the options expire, options sellers or market makers may manipulate the price of the underlying asset, according to the idea behind maximum pain.