Future and option
Many time people have asked me whether any mathematical method is available to trade in futures. The answer is yes it is available.
The trade is initiated by both the parties by the way of paying some token amount called margin. The obligation of the trade is guaranteed by the exchange through daily Mark to market procedure. Hence we have the risk to manage the MTM and margin if volatility increases. The success solely depend on how you manage the risk.
The details of these individual methods are beyond the scope of this article. How ever plenty of web resource is available to guide you in this subject. However trade can have objective. I always say do not expect too much from market. Be objective and keep minimum exposure with the help of decoupling method or option hedging. Must Read Article a. How to use 1SD level to form option strategy? How to do intraday and positional trade using 1SD formula? Covered call option strategy using 1SD formula d.
Multiple bull or bear spread using 1SD e. How to profit from the cross calendar option strategy? How to make profit in straddle option strategy? Intraday GAV Technique h. Day Trading Made Easy i. If you buy the contract, you promise to pay the price at a specified time.
If you sell it, you must transfer it to the buyer at a specified price in the future. He is, however, not obligated to do so. The seller of an option is obligated to settle it when the buyer exercises his right. In futures contracts, the buyer and the seller have an unlimited loss or profit potential. The buyer of an option can make unlimited profit and faces limited downside risk.
The seller, on the other hand, can make limited profit but faces unlimited downside. Required to pay only margin money. What are futures and options? There are of two types contracts: What is a futures contract? What is an options contract?
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