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Futures

Futures are a type of financial contract that has obligations to a buyer or a seller to buy or sell an asset, which may be commodities such as bonds or currencies or other financial instruments i.e. stock indices at an agreed date for an agreed price, as specified in the futures contract. The Futures contract specifies the underlying details including quantity of the asset, and are standardized to enable trading on an exchange. The exchange is basically a clearinghouse or rather a continuous auction house that provides clearing and settlement services. The futures contract will also include whether this is a cash or physical delivery of the asset which must be carried out on the agreed settlement date on the futures contract.

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Options

A complete definition of ‘options’ in the financial markets context is not a simple black and white task. Yes, it is true that an option is a contractual agreement between two parties, one to sell and one to buy. But there are many different types and styles of options and each one has its own definition, a brief explanations of some of the various meanings are given below.

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