Investment In Nifty Future And Option

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<h1>Investment In Nifty Future And Option</h1><strong> Author: <a href='http://www.articleseen.com/profile_Andrewbazar.aspx'>Andrewbazar</a></strong><br /><p>Nifty is a benchmark index of NSE (National Stock Exchange) of India for Indian Equity Market, which is decided by the performance of top 50 companies that are listed in NSE. This is the reason of formation of the word “Nifty” with the abbreviations of combination of initial letters of two words i.e. “Nifty” & “Fifty”. It can be said that Nifty index varies along with the performance of top-50 companies. Nifty trading is different from the traditional equity trading. There are two kinds of trading that are placed here; one is a future contracts & other could be an options contract. The futures contract is a standard & transferrable contract in which a trader commits to buy or sell the underlying stocks at a forthcoming (future) date. It is considered as a legally binding contract in terms of quality, quantity, time as well as place of delivery on a future date. In this contract, there is an expiry date and there is an obligation to buy. The whole trading for Nifty is regulated by SEBI (Securities & Exchange Board of India), which control the market and make sure that investors dealing don’t take control of the market and to prevent fraudulent activities. Transactions under future contract are settled in three ways: 1. Cash Settlement: Under this settlement, traders use to settle the whole issue by paying the difference between the present rate of the underlying asset and the future price. 2. Squaring off: In this settlement, traders take a stand which is just opposite of their original one. If they have been purchasing gold, they square off by selling an identical number. 3. Delivery: Under this settlement, by physically delivering the underlying asset on the date specified. The options contract gives the holder or buyer the right to sell or buy the underlying securities at the predetermined price at end of the period but they have no any obligation to settle the option. The buyer or sellers are obligated to accept the terms of the contract. The underlying asset can be stock, securities or index. The selling option is called the Put option while the buying option is the Call option. Option premium is the price of an option. The price on which the underlying security can be sold or bought is known as the Strike price. Put option holders can sell stock at strike price while Call option holders can buy the stock at the strike price. These contracts can also be settled by underlying asset or cash.</p><strong>About the Author:</strong><br />Nifty provides a great opportunity to investors & they can earn by investing in <a rel="nofollow" href=http://bazarclicks.com/bank-nifty-future.html>Bank Nifty future</a>. They can also invest in option by getting profitable <a rel="nofollow" href=http://bazarclicks.com> Nifty option tips</a> from a reputed financial advisory firm.<p> Article Source: <a href='http://www.articleseen.com/Article_Investment-In-Nifty-Future-And-Option_318406.aspx'> http://www.articleseen.com/Article_Investment In Nifty Future And Option_318406.aspx</a></p>

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Keywords : Nifty Option Tips, Bank Nifty Future,

Category : Finance : Stock Market