Derivatives segment of the market is one of the most vibrant segment and has attracted money in larger sizes. The segment offers future & options trading for stocks, indices, currencies, commodities etc which provide strong earning source with little of margins used. Derivates are those types of security whose value is determined or derived from another financial assets such as stocks, indices, currencies, commodities. Such derivatives largely includes future contracts and options.
Benefits of FnO Trading with Mangal Keshav
- Get the most advanced tools for derivatives trading
- Seamless technical support & assistance
- Robust technical recommendations
- Effortless trading experience.
Futures- A futures contract can be of stock or indices or of commodity too. When you buy a stock future, you promise to pay for the stock at a future date. If you sell a stock future that means you to deliver a stock at a future date. The contracts are settled by adjusting the funds or cash on exchange on a later date.
Options- In options there are two types of contracts, i.e call or put. A call gives option for the buyer a right to claim a particular stock or index at a pre-determined price. Where as put option gives buyer a right to sell a particular stock or index at a pre-determined price. You have to pay a premium to buy a option. The options are based on the underlying assets like stocks and indices. A person buys a call option when he expects the underlying stocks or indices to rise and person who expects the underlying stock or indices to fall buys puts of the particular stock or indices
What is the purpose and use of Derivatives?
The futures and options are standardized contracts traded openly on exchanges and are used for various purposes such as using excess cash for earning some profit in short term. Hedging against the price fluctuations, etc.
play with his existing holding and yet wants to benefit from price fluctuations in the market. You can use derivatives instruments to get the benefit of the current market situations. For Example, you are holding a stock and the price of that stock is going up consistently and you don’t want to sell it soon as you plan to hold it for long term. But, you still want to benefit from the price fluctuation happening in the stock and earn some bucks in short period of time.
Protect against volatile times- When the market is turning the tides and swings in both the directions. In such times the derivatives provide you with hedge against such volatility and help you maintain your returns intact.
Arbitrage- One can use the arbitrage to benefit from such derivatives products. One can buy one market and sell it in other market at high price it is called arbitrage.
Risk aversion- When market is volatile and risk is high into the market the conservative investors tend to sell in such market and improve the risk in their portfolio. It leads to price speculation which is beneficial for risk taking investors who by trading in derivatives such as futures and options benefit a gain out of it.
What are requirements to starts derivatives trading?
Demat account- You need to have a demat account to trade in derivatives. Demat account holds your investment securities.
Trading Account- One needs to have trading account to trade in derivatives as it is the only facility which conducts trade. Trading account also provides you with tools to trade efficiently and gain a profit out of it.
Margins- When a trader or investor trades in derivatives segment use margins provided by the broker to take bigger positions in the market and earn more profit. It is pre-dominantly used by derivatives traders who use such facility to take bigger positions in the market. The margins are the kind of loans provided by the broker to trader to invest in the market and earn profit out of it and payback the margin part to the broker.
How to trade in Derivatives market?
Step 1- Research well before you enter into the derivatives trading market. The Derivatives trading is the most riskiest investment class. It gives highest returns because it bears highest of the risks too. Hence, when you enter into such riskier type of asset class you need to research well on which type of contracts you should buy or what kind options strategy you should adopt in bearish market sentiment and vice versa. The research will help you gain knowledge about the segment and will help you in mitigating the risks involved in derivatives trading.
Step 2- Margin maintenance is one of the healthy rules one should follow while trading in the derivatives segment. One should not withdraw the amount from the account until your trade is settled. As your margin amount changes according to the underlying stock or indices price changes.
Step3- Start trading in the derivatives with your trading account . Get the derivatives services segment activated for your trading account through broker. Post that you can start trading into the derivative segments. The online share trading system provided by the broker makes it more efficient to spot the opportunities using various technical tools. Spot the opportunity using the tools and start trading in the segment.
Step 4 – Take adequate measures and learnings from the trading patterns and experiences you had. You should trade into the derivatives by knowing your own risk taking abilities and should go over the board by risking your own money in the market.
What are Stock futures?
Stock futures are those derivatives contract which give you right to buy or sell a stock for future date at agreed price. Stock futures are the traded with lot of shares. i.e one company’s stock futures are not traded using single shares. They are traded using lot of shares of the company. The lot size of shares differ from stock to stock and it is pre-determined by the exchanges on which the stock futures are traded. The contracts are traded for period of time such as 1 month 2 months 3 months. Once the duration of the contract is over the existing contracts get expired a new contract is issued. The contract gets expired on Thursday of the respective months last week. The last day of the contract is known as expiry
Where to start with Derivative trading?
If you are looking for derivatives trading and looking for some value added services in the derivatives segment. We provide you with best of the class trading terminals and boutique made technical products which help you in gaining returns in derivatives segment. We are one the oldest and experience service providers in the business since 1939, providing lakhs of investors advise on their journey into stock market in all segment of the market. Open free trading account with Mangal Keshav Now.
