Join Courses
Attend Webinars
Get Free Counselling
  • Select Language
    • Hindi
    • Bengali
+91 9903 222 555
Elearnmarkets - Financial Market Learning
Join Courses Of Elearnmarkets
  • Basic Finance
  • Technical Analysis
  • Fundamental Analysis
  • Derivatives
  • Financial Planning
  • Miscellaneous
No Result
View All Result
  • Basic Finance
  • Technical Analysis
  • Fundamental Analysis
  • Derivatives
  • Financial Planning
  • Miscellaneous
No Result
View All Result
Elearnmarkets - Financial Market Learning
Home Derivatives

22 Commonly used Terms in Derivatives Market

Elearnmarkets by Elearnmarkets
March 3, 2020 - Updated on November 18, 2020
Reading Time: 3min read
0
3.2k
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Hindi: आप इस लेख को हिंदी में भी पढ़ सकते है|

  • When dealing in the stock market, you must have heard the term “Derivatives”
  • A derivative is an agreement between two parties, which derives its value from an underlying asset, which may be stocks, currency, commodities, etc.
  • It is mainly used as a tool for hedging, speculating as well as arbitraging.
  • The common types of derivatives are options, futures, forwards, and swaps.

Let us understand the most common terminology which is associated with the derivatives market:

For detailed understanding of derivatives, you can also refer to the link here: Certification in Online Derivatives Demystified

  1. American Style Option: A type of option that can be exercised at any time unlike the European Style option which can only be exercised at expiry
  2. At-the-Market: A kind of financial transaction where the order to buy or sell is executed at the current market price.
  3. At-the-Money Spot: An option whose strike price is equal to the current market price in the cash spot market.
  4. At-the-Money Forward: An option whose strike price is equal to the current market price in the forward market.
  5. Call Option: It is a financial contract that gives the owner the right but not the obligation to buy a specific amount of the underlying financial instrument at a particular price with a specific date of maturity.
  6. Commodity Swap: A contract in which counterparties agree to exchange payments related to indices, at least one of is a commodity index.
  7. Currency Swap: A currency swap involves the exchange of an interest in one currency for the same in another currency.
  8. Delta: The change in the financial instrument’s price to changes in the price of the underlying cash index.
  9. Equity Swap: A contract in which counterparties agree to exchange payments related to indices, at least one of which is an equity index.
  10. European Style Option: An option that can be exercised only at expiry as opposed to an American Style option
  11. Forward Contracts: An over-the-counter obligation to buy or sell a financial instrument that is settled privately between the two counterparties.
  12. Futures Contracts: An exchange-traded obligation to buy or sell a financial instrument.
  13. Gamma: The degree of curvature in the financial contract’s price curve to its underlying price.
  14. Hedge: A transaction that offsets an exposure to fluctuations in financial prices of some other contract or business risk.
  15. In-The-Money Spot: An option with positive intrinsic value with respect to the current market spot rate.
  16. In-The-Money-Forward: An option with positive intrinsic value with respect to the current market forward rate.
  17. Option: The right but not the obligation to buy (sell) some underlying cash instrument at a specific rate on a particular expiration date.
  18. Premium: The cost associated with a derivative contract, referring to the combination of intrinsic value and time value.
  19. Put Option: A put option is a financial contract giving the owner the right but not the obligation to sell a particular amount of the underlying financial instrument at a pre-set price.
  20. Spot: The price in the cash market for delivery using the standard market convention.
  21. Strike Price: The price at which the holder of a derivative contract exercises his right.
  22. Theta: The sensitivity of a derivative product’s value to changes in the date, all other factors staying the same.

We hope now you will able to understand the derivatives terms when dealing in the same.

Happy Learning!

Tags: basicderivative marketderivativesenglishfutures and optionsoption greeksoptions
ShareTweetShare
Subscribe To Updates On Telegram Subscribe To Updates On Telegram Subscribe To Updates On Telegram
Previous Post

एटीएम (ATM) मशीन से धनराशि कैसे निकालें?

Next Post

22 महत्वपूर्ण बैंकिंग टर्म्स जिन्हें आपको जानना आवश्यक है

Elearnmarkets

Elearnmarkets

Elearnmarkets (ELM) is a complete financial market portal where the market experts have taken the onus to spread financial education. ELM constantly experiments with new education methodologies and technologies to make financial education effective, affordable and accessible to all. You can connect with us on Twitter @elearnmarkets.

Related Posts

Derivatives

Bull Call Spread Options Strategy – All you should know

October 13, 2020 - Updated on November 18, 2020
1.3k
Derivatives

फ्यूचर मार्केट में ओपन इंटरेस्ट की भूमिका क्या है?

September 17, 2020 - Updated on December 11, 2020
714
Derivatives

ओपन इंटरेस्ट एनालिसिस से मार्केट ट्रेंड की पहचान करने में कैसे मदद मिलती है?

September 17, 2020 - Updated on December 11, 2020
1k
Derivatives

Option Moneyness – ITM, OTM & ATM Options

September 15, 2020 - Updated on November 18, 2020
3.5k
Next Post

22 महत्वपूर्ण बैंकिंग टर्म्स जिन्हें आपको जानना आवश्यक है

असफल एटीएम लेनदेन के लिए 4 सुरक्षित उपाय

सपोर्ट और रेजिस्टेंस लेवल के आधार पर ट्रेडिंग

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Follow Us

Download App

Register on Elearnmarkets

Continue your financial learning by creating your own account on Elearnmarkets.com

Register Free Account

GET ARTICLES ON EMAIL

Enter your email address:

Categories

  • Banking
  • Basic Finance
  • Bonds & Fixed Income
  • Budgeting & Savings
  • Capital Markets
  • Charts
  • Charts, Patterns & Indicators
  • Commodity, Currency & FOREX Market
  • Derivatives
  • ETFs & Mutual Funds
  • Financial Planning
  • Financial Statement Analysis
  • Fundamental Analysis
  • Macroeconomics
  • Market Analysis
  • Market Updates
  • Market Wrap
  • Marketshala
  • Miscellaneous
  • Open Interest
  • Personal Wealth
  • Retirement Planning
  • Sector Analysis
  • Tax Planning
  • Technical Analysis
  • Trading Terms, Rules & Strategies
  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling

© 2020 Elearnmarkets All Rights Reserved

No Result
View All Result
  • Article Categories
  • Basic Finance
  • Derivatives
  • Financial Planning
  • Fundamental Analysis
  • Market Analysis
  • Miscellaneous
  • Technical Analysis
  • Select Language
    • Hindi
    • Bengali
  • Learn finance
  • Browse Courses
  • Webinars
  • Free Guides
  • Get Free Counselling

© 2020 Elearnmarkets All Rights Reserved