Arbitrage is basically buying a security in one market and simultaneously selling it in another market at a higher price, profiting from a temporary difference in prices. This is considered riskless profit for the investor/trader.

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'Call Option' give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date.

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In- the- money options (ITM) - An in-the-money option is an option that would lead to positive cash flow to the holder if it were exercised immediately. A Call option is said to be in-the-money when the current price stands at a level higher than the strike price. If the Spot price is much higher than the strike price, a Call is said to be deep in-the-money option. In the case of a Put, the put is in-the-money if the Spot price is below the strike price.

At-the-money-option (ATM) - An at-the money option is an option that would lead to zero cash flown if it were exercised immediately. An option on the index is said to be “at-the-money” when the current price equals the strike price.

Out-of-the-money-option (OTM) - An out-of- the-money Option is an option that would lead to negative cash flown if it were exercised immediately. A Call option is out-of-the-money when the current price stands at a level which is less than the strike price. If the current price is much lower than the strike price the call is said to be deep out-of-the money. In case of a Put, the Put is said to be out-of-money if current price is above the strike price.

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Click here to login to derivative section.

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Click here to schedule a detailed training.

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Futures and Options contracts expire on the last Thursday of the expiry month. If the last Thursday is a trading holiday, the contracts expire on the previous trading day. Futures and Options contracts have a maximum of 3-month rading cycle -the near month (one), the next month (two) and the far month (three), except for the Long dated Options contracts. New contracts are introduced on the trading day following the expiry of the near month contracts. The new contracts are introduced for a three month duration. This way, at any point in time, there will be 3 contracts available for trading in the market (for each security) i.e., one near month, one mid month and one far month duration respectively.

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Tools available for F&O are derivative infokit, derivative digest and daring derivatives. Click here to check the details.

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WEBSITE: Enter your login credentials and select >> Reports  >> Transaction Reports >> Equity >> Ledger Summary. TRADE TIGER: Login to Trade Tiger >> Reports >> Transaction Reports >> Equity >> Ledger Summary.

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Stock Future contract is an agreement to buy or sell a specified quantity of underlying equity share for a future date at a price agreed upon between the buyer and seller. The contracts have standardized specifications like market lot, expiry day, unit of price quotation, tick size and method of settlement.

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In addition to SPAN margin which is collected at the time of initiating trades, an additional margin over and above the SPAN margin is collected which is known as the Exposure margin and is also known as additional margin. This margin is collected in order to protect a brokers liability which may arise due to wild swings/moves in the markets. Click here to know more.

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Hedging is buying and selling futures contracts to offset the risks of changing underlying market prices. Thus it helps in reducing the risk associated with exposures in underlying market by taking a counter- positions in the futures market. For example, an investor who has purchased a portfolio of stocks may have a fear of adverse market conditions in future which may reduce the value of his portfolio. He can hedge against this risk by shorting the index which is correlated with his portfolio, say the Nifty 50. In case the markets fall, he would make a profit t by squaring off his short Nifty 50 position. This profit t would compensate for the loss he suffers in his portfolio as a result of the fall in the markets.

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An index option is a financial derivative that gives the holder the right, but not the obligation, to buy or sell the value of an underlying index, such as the Standard and Poor's (S&P) 500, at the stated exercise price on or before the expiration date of the option.

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Yes, margin % can be changed during the life of the contract depending on the volatility in the market. It may so happen that you have taken your position and 25% margin is taken for the same. But later on due to the increased volatility in the prices, the margin % is increased to 30%. In that scenario, you will have to allocate additional funds to continue with open position. Otherwise it may come in MTM loop and squared off because of insufficient margin. It is advisable to keep higher allocation to safeguard the open position from such events. Click here to know more.

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Mark-to-market (MTM) is an accounting method that records the value of an asset according to its current market price.

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It’s a view  of most active shares in F&O by all Futures, Options, Index Futures, Index Options, Stock Futures, Stock Options filter by All Expiries.

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In options trading, you take buy/sell positions in index or stock(s) contracts expiring in different months with various Strike Price. If, during the course of the contract life, the price moves in your favor, you make a profit. In case the price movement is adverse, you incur a loss. Click here to know more.

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Stock option writing is highly risky hence as per our risk parameters it is required to maintain a minimum balance of Rs. 200,000/- at all times either in cash or stock. For activating this facilty  you are requested to  contact your branch / RM or call Customer Service on 022-25753200/25753500 / write to myaccount@sharekhan.com.

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Exchanges levies  penalty on Trading Members on short collection of margin or non collection of margin in the derivatives segment (F&O and Currency Derivatives).  in case any penalty is debited by the Exchange due to insufficient margin in your trading account the same would be passed on /debited to you. We request you to please maintain sufficient margin in your account for all your transactions in derivative segment.

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Premium is the downpayment the Buyer of Call or Put is required to make for entering the options agreement.

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Put is the Right but not the obligation to sell the underlying Asset at the specified strike price by paying a premium. The Buyer of a Put has the Right but not the Obligation to Sell the Underlying Asset at the specified strike price by paying a premium whereas the Seller of the Put has the obligation of Buying the Underlying Asset at the specified Strike price.

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Options chain lists options prices of all of the options for a given stock or index option. It allows you to track the price premiums, bid and ask price, bid and ask quantity for all the put and call option strike prices of the security for a given maturity period.

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Strike price is the pre-determined price at which the buyer and seller of an option agree on a contract or exercise a valid and unexpired option.

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A derivative is a financial instrument with a price that is based on (that is, derived from) a different asset. The underlying asset is the financial instrument (such as stock, futures, a commodity, a currency or an index) on which a derivative's price is based.

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