1 / 6

What is Futures Trading?

Investors opt for futures trading to hedge investments and buy them at a predetermined price at an already decided specific date. According to the futures contract, the buyer must buy, and the seller must sell before the expiration date. <br>This presentatino will give you a clear idea about futures trading(https://www.edelweiss.in/investology/introduction-to-derivative-markets-8335c5/what-is-futures-trading-b2bb9d).

rahultiwary
Download Presentation

What is Futures Trading?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. What is futures trading?

  2. Introduction Investors opt for futures trading to hedge investments and buy them at a predetermined price at an already decided specific date. According to the futures contract, the buyer must buy, and the seller must sell before the expiration date. We will further understand what is futures trading.

  3. What is a futures contract? The futures contract is a financial product that involves derivatives trading. A derivative is a financial contract whose value is determined basis the value of the underlying asset. As mentioned earlier future contracts are similar financial products which are contracts made between buyer ad seller where the buyer buys the derivative at the fixed price. Eventually, the contract price fluctuates relative to the fixed price of the trade and thus profit or loss is generated.

  4. What is futures trading Future trading involves obligation which makes it mandatory for the buyer and seller to abide by the agreement and complete the trade on a predetermined date and price. The predetermined time I futures trading is called delivery date and the fixed price is called futures price. • The value of future contracts is influenced by the value of the underlying asset. If the value of underlying assets rises it increases the value of future contracts too • Future contracts can be transferred and can be traded. If the seller wants to move out of the contract the seller can transfer the ownership to some other party. This applies to the buyer as well • Future contracts involve obligation from both the parties hence these contracts must be properly regulated to avoid chances of default. In India, SEBI looks after the futures trading to ensure smooth functioning • Future contracts follow a standardized procedure and cannot be customized by any individual and the conditions cannot be negotiated • The settlements in futures trading are done through cash. The differences in cash values are paid by one party to another

  5. Conclusion To sum up we understand the meaning of Futures and we know it is an agreement made at a fixed price in the future. It is dependent on the direction of the stock’s price fluctuations. You should learn about derivatives even more to get a hold on the concept and become an active trader in the derivative markets.

  6. THANK YOU

More Related