Various versions have evolved over the years, sometimes by accident, sometimes on purpose.
Futures and options are the major types of stock derivatives trading in a share market. These are contracts signed by two parties for trading a stock asset at a predetermined price on a later date. Futures and options basics provide individuals to reduce future risk with their investment through pre-determined prices. The article explains how a trader can employ futures contract to financially profit from his directional view on a stock or an index. Practical examples are used to illustrate how the trade would evol.
An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance. An IPO allows a company to raise capital from public investors. The transition from a private to a public company can be an important time for private investors to fully realize gains from their investment as it typically includes a share premium for current private investors. Meanwhile, it also allows public investors to participate in the offering.
A commodity futures contract is a standardized contract that obliges the buyer to purchase some underlying commodity (or the seller to sell it) at a predetermined future price and date. Commodity futures can be used to hedge or protect a position in commodities.
Direct funds are those mutual fund schemes that are directly offered by the fund house or AMC. The names of these funds are prefixed by the word 'direct'. There is no involvement of a third party, distributor, or agent. Hence, the expense ratio of direct plans is comparatively lower than that of regular funds.
Currency derivatives are contracts that derive their value from their underlying asset, the currency. Currency derivatives help protect against price volatility of the underlying asset in the future and are widely used by traders as a risk management financial instrument.
