How futures and options are traded in BSE and NSE?With a simple example?

3 Responses to “How futures and options are traded in BSE and NSE?With a simple example?”

1. Anil S says:

   September 20, 2009 at 7:14 am

   One takes the lot of share with very little margin.If the Price goes upo then you make profits But otherwise you are doomed. In this fall close friends of mine have lost 1 Crore each , so my advise is Do not even think about this
   References :
2. Eddie W says:

   September 20, 2009 at 7:52 am

   Your question is way too big and probably requires a book to cover it all. First thing first, do you know what is future and option? Other things such as cover calls, cover puts, short calls and short puts are even more complicated to explain.

   Let me be very brief, as an example.

   Let’s say you have a cup, I now give you $1 to gain control of your cup for 2 weeks. This $1 is for you to keep, you never have to return it. Within this 2 weeks, I can do whatever I want with your cup, including selling it. On the expiry day, I would have the OPTION to give you back the cup, or $10, this is what we were agreed upon. Within this 2 weeks, if I have sold the cup for $12, on the expiry day, I’d have to give you $10, I’d keep $2, subtracting that $1 I’ve given to you earlier, I’ve made 100% in 2 weeks.

   When someone is willing to buy the cup for $11, is called ‘in the money’; that means I’d make an even.

   Selling the cup for $10 and give it to you on the expiry day is meaningless. I won’t do it.

   If I am unable to sell you cup within this 2 week, the cup would have to be returned to you. You keep that $1.

   Option deals with stocks. Future deals with commodities, oil, lumber, cotton, pork belly and whatever.

   Call means the price is going up.
   Put means the price is going down.
   Cover means something that you possess.
   Short means something that you don’t have, you’d have to borrow it from someone.

   I hope this brief information helps.
   References :
3. Sateesh Kumar says:

   September 20, 2009 at 8:19 am

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   References :
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