Derivatives

35 articles

What is Forward Market? image placeholder

In stock market you get financial products called forward contracts for future deliveries. Forward contacts allow you to buy or sell assets at a specific price and at a specific time in future. Traders purchase and sell them in order to speculate (increase returns) or hedge (protect investments). The Forward Markets Commission in India oversees the forward and futures markets. The forex market is often associated with the forward market. However, it also involves trading of commodities, interest rates, and other securities.

OTC derivatives are contracts that derive their value from underlying assets such as stocks, bonds, commodities, interest rates, currencies, or credits. Their flexibility and adaptability make OTC significant. In contrast to exchange-traded derivatives, OTC contracts allow parties to customise their agreements for specific purposes. Find out about OTC meaning, how they work, types, advantages, and disadvantages by reading this article.

A derivative is a contract where its value is derived from its underlying asset. The underlying asset can be stock, commodity, bond, currency, etc. In this contract, the buyer agrees to buy the asset on a specific date at a determined price. There are mainly three types of derivative instruments— futures, options and forwards.

What are OTM Call Options image placeholder

Out-of-the-money (OTM) call options are call options with a strike price that is above the current market price of the underlying asset.

What Are Covered & Naked Options Contracts?

Learn about covered & naked options contracts. Know how buying the underlying assets allows you to hedge against potential losses.

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