How long do derivative contracts last?
Derivative contracts, especially futures and options, usually have a set expiration date. Most commonly, these contracts are valid for three months. However, the duration can vary based on the specific contract and market practices. Always ensure you're aware of the expiry date when entering a contract.
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What is a Derivative?
A derivative is a financial contract between two parties, the value of which is derived from an underlying asset. Rather than trading or investing directly in the asset itself, participants enter into an agreement based on the asset's expected future ...
Can I hold onto derivatives contracts indefinitely?
No, you can't hold onto derivatives contracts indefinitely. These contracts are time-bound and have specific expiry dates. They are valid only for a set duration and expire either on a weekly or monthly basis, depending on the type of derivatives. ...
What happens when a derivative contract expires?
When a contract reaches expiration, different settlement processes come into play based on the type of contract. For cash-settled contracts, such as Index derivatives, all outstanding positions are settled in cash. Any profit or loss you've incurred ...
Can I short futures contracts without owning the underlying shares?
Absolutely. With FYERS, you can short futures contracts without the need to hold the underlying shares. This is because futures contracts are settled in cash, eliminating the requirement for physical possession of the securities in your Demat ...
What's the difference between an underlying asset and a derivative contract in trading?
In derivatives trading, the term "underlying asset" refers to the financial instrument that a derivative represents, ultimately determining its value. On the other hand, a derivative contract is an agreement between two parties based on the value of ...