Know About Principle of Futures and Options Markets from Our Economics Experts
Futures and options are two common forms of derivatives which derive their value based on selling prices of stocks. These two are important market features. Being a student of economics, it is important for you to know about all the attributes related to a market. With our futures and options markets assignment help, you can enhance your knowledge about futures and options markets.
Features of futures and options markets:
Like any other market, a futures market also has buyers and sellers. It is a place of meeting for buyers and sellers, and executes any kind of transaction. There is a seller for every buyer, and there is a buyer for every seller. Synchronising these together in order to execute a trade successfully, it needs an active participation of a number of individuals and organisations. Each of them has a specific role, which in overall makes the futures market efficient platform which it is today. Options markets also have almost the same features.
Our futures and options markets assignment help experts can explain you options market in a more elaborate way
Options contracts grant authority to the holder of the instrument to buy or sell the underlying asset at a fixed rate. An option can be referred as a ‘call’ option or a ”put’ option.
A call option enables the customers to buy assets at a given rate which is also known as strike price. It is noteworthy that when the holder of the call option has authority to demand sale of asset from the seller, the seller has only the obligation and not the right.
Likewise, a put option grants authority to the buyers to sell the asset at the ‘strike price’ to the buyer. In this case, a buyer has authority to sell, while a seller has an obligation to buy.
Few terms that you must know to understand futures and options markets assignment help in a better way.
- Futures exchange-
It is a central player in futures market which provides a platform for selling and buying futures contracts. The traders follow the exchange’s guideline and the Commodity Futures Trading Commission (CFTC). Each exchange has a list of products to sell, and traders sell every product in a designated futures trading pit.
- Futures broker–
A future broker creates a link between the trading pit and the trader. It takes orders from the consumers and executes them in the futures pit. However, a future broker does not have the right to take money from customers and hold them in deposit.
- Futures Commission Merchant–
It is accountable for holding customers’ capital of the margin account, clearing off futures trading, and executing all back-office recording functions.
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