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Discussion in 'Articles & Tutorials' started by optiontips.in, Aug 19, 2012.

  1. optiontips.in

    optiontips.in
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    Futures and options tips by OPTIONTIPS.IN will help you make considerable profits in the Indian stock market irrespective of the position of the underlying asset. The various option trading strategies like straddle, strangle and that options trading strategies will help you make profits when the prices of the underlying assets are moving upwards strongly or moving downwards strongly. However there are other futures and options tips which are required to make profits on the options trading in the Indian stock market.

    The futures options provide a fantastic way to trade in the futures market. In the futures market there are many traders who actually start by trading futures options in the stock market instead of treating the straight futures contracts. This allows the traders to experiment with different option trading strategies before they can zero down on one strategy which provides very little risk and volatility but provides considerable profits.

    Futures Options:
    Futures options are nothing but the right and not the obligation to buy or sell futures contracts at pre-decided price. The investors usually buy the options in the Indian stock market in order to decide on the price of the futures contract so that the prices of the futures contracts go up or go down for the trading purposes. So there are essentially two types of options known as the call option and the put option.


    Call Option:
    The call option is usually a contract between the seller and the buyer in a financial perspective. This is often referred to as the call option. In the call option the buyer has the right to buy the commodity at a pre-decided price from the seller in a particular option for the price that was fixed for the option at a particular time. However this right must never be treated as an obligation but must be treated as the privilege of the buyer to get the commodities as per the details of the option.

    In the call option the seller is bound by duty to sell a commodity at the text price and at the fixed time to the buyer. Unlike the buyer the seller is obliged to perform this task. The buyer usually pays a fee which is often called as the premium for the commodity. In the buyer's perspective the price of the commodity must increase in the future while in the seller's perspective the price of the commodity must not increase.

    Put Option:
    The put option is basically the opposite of the call option. Hence in the put option a person will sell the futures contract in case he or she feels that the underlying future prices will move downwards. In the Indian stock markets there are also something known as the ‘soybean futures' from where the underlying futures prices will move downwards. This is commonly called the ‘soybean put option'.

    The put option also involves a mentor of the premium which is usually paid by the buyer to buy the option. In the put option there is also an expiration date of the options. Hence they only last for a certain period of time.
     

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