Advance Derivative Analysis(Future+Option)
Options can be used for taking a view on the future direction of the market or for arbitrage. Options is also helpful for implementing various trading strategies. Like all forms of trading, options trading has its own unique characteristics, andit is a bit more complicated than a lot of the alternatives. However, the basic concept is very similar to any other form of investment; the goal is to make profits through the buying and selling of financial instruments.
A stock option is a contract between two parties in which the stock option buyer (holder) purchases the right (but not the obligation) to buy/sell shares of an underlying stock at a predetermined price from/to the option seller (writer) within a fixed period of time.
Options trading might not be for everyone, of course, but there is plenty about it that investors might find appealing when they discover just what the potential benefits are.
Options contracts are one of the more complex financial instruments. Ultimately, the principle of investing and trading them is, of course, to make money. In fact, options trading offer many different ways to make profits from the price movements of a range of assets and securities. Even though they aren’t particularly straightforward when compared to simply buying stocks, the potential rewards can make learning how to trade options successfully very worthwhile indeed.
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