Elearnmarkets - Financial Market Learning
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
  • Courses
  • Webinars
  • Go To Site
  • Login
Elearnmarkets
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
Webinars
Elearnmarkets - Learn Stock Market, trading, investing for Free
No Result
View All Result
Home Derivatives

22 Commonly used Terms in Derivatives Market

Elearnmarkets by Elearnmarkets
September 13, 2021
in Derivatives
Reading Time: 4 mins read
0
5k
VIEWS
Share on FacebookShare on TwitterShare on WhatsApp

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

Learn about Derivatives:

  • 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:

Derivative

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!

BOTTOMLINE

Gather the basics of Derivatives Market from Elearnmarkets in the course Derivatives Made Easy.

Also Check Stockedge to get updated Financial Market scenarios and start investing with reduced risk.

Tags: basicderivative marketderivativesenglishfutures and optionsoption greeksoptions
ShareTweetSend
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

options pricing
Derivatives

7 Factors Affecting Options Pricing

May 11, 2022
3.6k
cpr indicator
Derivatives

Profitable Options Trading using CPR Indicator by Mr Gomathi Shankar

May 6, 2022
6.5k
open interest
Derivatives

Trading Strategy using Options Open Interest by Mr Abhijit Phatak

April 30, 2022
7.2k
options trading
Derivatives

How to do Proper Risk Management in Options Trading by Mr Shreyas Bandi

April 22, 2022
6.3k

Leave a Reply Cancel reply

Your email address will not be published.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

Follow Us

Facebook-f Twitter Instagram Linkedin-in Youtube Telegram

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

  • Basic Finance
  • Derivatives
  • Financial Planning
  • Fundamental Analysis
  • Technical Analysis
  • Marketshala
  • Miscellaneous

© 2022 Elearnmarkets . All Rights Reserved

  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling

Get Elearnmarkets App

No Result
View All Result
  • Article Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • Hindi
    • Bengali
    • English
  • Courses
  • Webinars

© 2020 Elearnmarkets All Rights Reserved

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
ELM School

LOVING OUR BLOGS?

Explore more content for free at ELM School.

Start reading & learning from various text-based modules covering all aspects of finance from today!

VISIT ELM SCHOOL