Futures and Options

The options market offers a variety of instruments that traders can use to sell options and profit before the expiration date. Expert options traders employ tools like calendar spreads, which are started when market sentiment is neutral. Various options have the same underlying asset and strike rate, but various expiration dates are started as calendar spreads.

An option trading strategy which is done by combining multiple calls and put options to develop a market-neutral strategy is known as the Iron Butterfly Strategy or Iron Fly Strategy. Know more about the Iron Butterfly Strategy in the following details The strategy of the Iron Fly Option Strategy is to run short call spreads and short put spreads in parallel. The Iron Butterfly Strategy comprises a credit spread comprising four options, limiting risk and potential profit. In periods of lower price volatility, this strategy is best used.

The exchange-traded derivative is a standardised derivative contract, such as a futures or options contract, that is traded on an organised exchange. If you've ever tried to grasp financial markets, watched a bit of financial news now and then, or even glanced at a financial newspaper occasionally, chances are you've come across the term "derivatives" many times. Know about Exchange Traded Derivatives in the following article.

An underlying asset refers to the financial asset on which a derivative contract, such as options or futures, derives its value. It could be a physical asset (like commodities or real estate) or a financial asset (like stocks, bonds, or indices). The value and performance of the derivative contract are closely linked to the price movements of the underlying asset.

Index futures are standardized financial contracts that enable investors to speculate on or hedge against the future value of an underlying stock market index without directly owning the individual stocks. They are traded on futures exchanges.

A Forward Contract is a financial agreement between two parties to buy or sell an asset at a predetermined price on a specified future date. It is a non-standardized contract, tailor-made to meet the specific needs of the buyer and seller.

A Short Straddle is an options trading strategy where an investor simultaneously sells a call option and a put option with the same strike price and expiration date.

In options trading, intrinsic value refers to the inherent worth of an option based on the difference between the strike price and the current market price of the underlying asset. For call options, if the market price is above the strike price, there is positive intrinsic value. For put options, if the market price is below the strike price, there is positive intrinsic value.