How is options trading different from trading futures?
In the case of futures trading, the buyer and seller have unlimited profit potential as well as loss potential. Whereas in options, the buyer has unlimited profit potential with limited downside, and the seller has limited profit potential and unlimited downside.
How is futures trading different from margin trading?
In a margin transaction, the positions are squared off the very same day whereas, in futures trading, the positions can be held until the expiry of the contract. In an intraday margin transaction, the investor has the option of converting his ...
Is MTM settlement applicable for options trading?
No, the Mark to Market (MTM) process is not applicable in the options contracts. The MTM is applied only in case of futures contract.
How does futures trading work?
To buy or sell futures, the investor is required to place a certain percentage of the order value as margin. In futures trading, the investor uses leverage to buy or sell more of the security than what he/she could have taken in the regular cash ...
What is options spread?
An options spread is when the investor buys as well as sells options of the same underlying security but of different strike prices and/or different expiries.
What is a futures contract?
A futures contract is an agreement between two parties to buy or sell an asset (Stocks, Indices, Currencies or Commodities) at a certain time in the future for a certain price. To make trading possible, the exchange specifies certain standardized ...