Future & Option Trading
Futures & Options are financial insturments that derive its value based o the underlying asset.
A future contract is the obligation to buy or sell an asset at a later date (contract expiry date) at an agreed upon price. Futures contract allow leverage and hence increase both the upside and downside risk and hence are suitable for more experienced traders only.
Options contracts give the right but not the obligation to buy or sell a specific asset at a specific price (strike price). Hence, option buyers faced limited risk only upto the premium amount invested. However, option sellers have a limited upside but unlimited downside risk. These instruments are highly complex and suitable only for experienced and active traders.
Derivative instrument can be traded on multiples underlying assets such as stocks, indexes, currencies and commodities.