FINOSUTRA

What are Currency Options Trading Option means a choice or an alternative.  Option: It is a contract between two parties to buy or sell a given amount of asset at a pre- specified   price on or before a given date .  The right to buy the asset is called call option and the right to sell the asset is called put option.   The pre-specified price is called as strike price and the date at which strike price is applicable is called expiration date.  Trade Forex Options https://finosutra.blogspot.com/2020/05/introduction-to-currency-markets.html What is Exchange Traded Currency Options / FX Options Explained | Trade Forex Options Buying an option is also called as taking a long position in an option contract and selling is also referred to as taking a short position in an option contract.  The difference between the date of entering into the contract and the expiration date is called time to maturity.   • The party which buys the rights but not obligation and pays premium

Currency Futures /  Currency futures Derivative Currency Futures Contract and Its Features |  Exchange Traded Currency Futures  Derivatives. https://finosutra.blogspot.com/2020/05/selection-criteria-nse-national-stock.html  Definition A futures contract is a standardized contract, traded on an exchange, to buy or sell a certain underlying asset or an instrument at a certain date in the future, at a specified price. When the underlying asset is a commodity, e.g. Oil or Wheat, the contract is termed a “commodity futures contract”. When the underlying is an exchange rate, the contract is termed a “currency futures contract”. Both parties of the futures contract must fulfill their obligations on the settlement date.  Currency Futures Currency futures are a linear product, and calculating profits or losses on these instruments is similar to calculating profits or losses on Index futures. In determining profits and losses in futures trading, it is essential to know both the co

What are major, minor and exotic currency pairs in derivative market. The most traded currency pairs in the world are called the Majors. The list includes following currencies: Euro (EUR), US Dollar (USD), Japanese Yen (JPY), Pound Sterling (GBP), Australian Dollar (AUD), Canadian Dollar (CAD), and the Swiss Franc (CHF).  https://finosutra.blogspot.com/2020/04/derivative-market-ka-gyan.html Unlike any other traded asset class, the most significant part of currency market is the concept of currency pairs. In currency market, while initiating a trade you buy one currency and sell another currency. Therefore same currency will have very different value against every other currency. For example, same USD is valued at say 45 against INR and say 82 against JPY. This peculiarity makes currency market interesting and relatively complex. For major currency pairs, economic development in each of the underlying country would impact value of each of the currency, although in varying degr

Introduction to Currency Markets /  Introduction to  Foreign Currency Markets What is  Currency Markets The current currency rate mechanism has evolved over thousands of years of the world community trying with various mechanism of facilitating the trade of goods and services. Initially, the trading of goods and services was by barter system where in goods were exchanged for each other. For example, a farmer would exchange wheat grown on his farmland with cotton with another farmer. Such system had its difficulties primarily because of non-divisibility of certain goods, cost in transporting such goods for trading and difficulty in valuing of services. https://finosutra.blogspot.com/2020/05/definitionofsecuritiesandderivativesasp.html Currency Market  For example, how does a dairy farmer exchange his cattle for few liters of edible oil or one kilogram of salt? The farmer has no way to divide the cattle! Similarly, suppose wheat is grown in one part of a country and sugar is

The Securities Contract (Regulation) Act, 1956   https://finosutra.blogspot.com/2020/04/what-is-forward-contract.html The trading of derivatives is governed by the provisions contained in the Securities  Contracts (Regulation) Act‐1956, the Securities Exchange Board of India Act‐1992, the  rules  and  regulations  framed  there  under  and  other  rules  and  bye–laws  of  stock  exchanges  Securities Contracts (Regulation) Act, 1956   The Act aims to prevent undesirable transactions in securities. It governs the trading of  securities in India. The term “securities” has been defined in the Section 2(h) of SCRA.  The term ‘Securities’ include:    Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable  securities of a like nature in or of any incorporated company or other body  corporate    Derivative   Units or any other instrument issued by any collective investment scheme to the  investors in such scheme

What are the criteria upon which NSE selects stocks for F&O trading  ? /  How are the stocks included in the F&O segment ? Eligibility Crite ria for stock selection . The stock selection criteria for derivatives trading in India ensure that stock is large in  terms of market capitalization, turnover and has sufficient liquidity in the underlying  market and there are no adverse issues related to market manipulation.  https://finosutra.blogspot.com/2020/04/various-risks-and-significance-of.html * Eligibility criteria of stocks for  F&O Segment  A stock on which stock option and single stock futures contracts are proposed to be  introduced shall conform to the following broad eligibility criteria:    a) The stock shall be chosen from amongst the top 500 stocks in terms of average  daily market capitalization and average daily traded value in the previous six  months on a rolling basis.   b) The stock’s median quarter‐sigma order size (MQSOS) over the la

What are option greek in derivative market. How to Understand Option Greeks /Option Greeks Explained. Option Greeks Option premiums change with changes in the factors that determine option pricing i.e.  factors  such  as  strike  price,  volatility,  term  to  maturity  etc.  The  sensitivities  most  commonly tracked in the market are known collectively as “Greeks” represented by  Delta, Gamma, Theta, Vega and Rho.  1) Delta (δ or ∆)   The most important of the ‘Greeks’ is the option’s “Delta”. This measures the sensitivity  of the option value to a given small change in the price of the underlying asset. It may  also be seen as the speed with which an option moves with respect to price of the  underlying asset.  Delta = Change in option premium/ Unit change in price of the underlying asset .  Delta  for  call  option  buyer  is  positive.  This  means  that  the  value  of  the  contract  increases as the share price rises. To that extent it is rather like a long

 Clearing Corporation  What is Clearing Corporation  Clearing Corporation/ Clearing House is responsible for clearing and settlement of all  trades executed on the F&O Segment of the Exchange. Clearing Corporation acts as a  legal counterparty to all trades on this segment and also guarantees their financial  settlement. The Clearing and Settlement process comprises of three main activities, viz.,  Clearing, Settlement and Risk Management.  Clearing and settlement activities in the F&O segment are undertaken by Clearing  Corporation with the help of the following entities: Clearing Members and Clearing  Banks.  *Clearing Members   There are 3 main type in clearing members. 1. Self clearing member : They clear and settle trades executed by them only, either  on their own account or on account of their clients.   2. Trading member–cum–clearing member: They clear and settle their own trades  as well as trades of other trading members and custodial participants.