new to futures & option ?
- Thread starter vipinenator
- Start date
http://www.daytradingshares.com/futures_options_derivatives_trading.html
http://stdwww.iimahd.ernet.in/beta/nuke/html/uploads/DerivBasics.pdf <- a bit old one but useful for learning purpose. read this one and understand the terminologies.
http://beyond-basics.blogspot.com/2008/01/beyond-equity-trading-derivative-basics.html
Friend, start with futures trading with MINIFTY futures.
A futures contract is a contract of underlying (shares/index) which will be traded on last thursday of the contract, read ahead and you'll understand.
A. Size - Futures trades with fixed contract-size or lot-size, in the case of minifty index futures (futidx), it is 20 units. and for stocks like bhel is 75 (futstk=stock futures). better learn the basics with minifty and later move to stock futures.
B. Money - you'd need about 10-30 percent margin on total contract value. so, MINIFTY has 20 units, and current nifty value is 3950 (20*3950=79000) to hold 79000 rupees of contract you need to have 20% of the contract value, 79000*10%=7900. so, 1 minifty lot comes at 7900 which is called the margin.
Now, coming to the Margin, margins are of 2 types:
1. span margin - 10% of total contract value
2. gross margin - 3% gross margin (when the prices go up or down, this 3% is used as insurance)
3. total margin required to buy 1 lot of minifty is = span+gross = approx. 10400.
C. Time - futures contracts are of three types, and
D. Profit/Loss: suppose you "go long" on 1 lot of minifty (you bought 1 minifty lot) and the price moves into profit, with each point rise you gain 20rs. And if you are "short on" minifty, then each point fall gives you 20rs. one point move against your position gives 20rs loss.
E. Brokerage: The borkerage for futures is very less. you'd require to pay 0.03% to 0.05% for each buy/sell transaction. which comes to 3-5 points profit will go to broker and above that the profit is all yours.
F. Rollovers: if you are holding this month contract and want to continue in the next month, you'll sell this month's futures contract and buy the next month's contract.
good luck
http://stdwww.iimahd.ernet.in/beta/nuke/html/uploads/DerivBasics.pdf <- a bit old one but useful for learning purpose. read this one and understand the terminologies.
http://beyond-basics.blogspot.com/2008/01/beyond-equity-trading-derivative-basics.html
Friend, start with futures trading with MINIFTY futures.
A futures contract is a contract of underlying (shares/index) which will be traded on last thursday of the contract, read ahead and you'll understand.
A. Size - Futures trades with fixed contract-size or lot-size, in the case of minifty index futures (futidx), it is 20 units. and for stocks like bhel is 75 (futstk=stock futures). better learn the basics with minifty and later move to stock futures.
B. Money - you'd need about 10-30 percent margin on total contract value. so, MINIFTY has 20 units, and current nifty value is 3950 (20*3950=79000) to hold 79000 rupees of contract you need to have 20% of the contract value, 79000*10%=7900. so, 1 minifty lot comes at 7900 which is called the margin.
Now, coming to the Margin, margins are of 2 types:
1. span margin - 10% of total contract value
2. gross margin - 3% gross margin (when the prices go up or down, this 3% is used as insurance)
3. total margin required to buy 1 lot of minifty is = span+gross = approx. 10400.
C. Time - futures contracts are of three types, and
- Near Month Contract -> current running month to last thursday of current month. example, this month is october, so 1m or near futures contract will expire on 30-october-2008
- Next Month Contract-> Next month contract which is also represented as minifty-2m or minifty-nov27 (the last day of expiry is last thursday of the contract month)
- Far Month Contract -> is the 3rd month contract which will be dec25 or dec24 (one day previous to a holiday) and we cannot buy/sell any 3rd month contract.
D. Profit/Loss: suppose you "go long" on 1 lot of minifty (you bought 1 minifty lot) and the price moves into profit, with each point rise you gain 20rs. And if you are "short on" minifty, then each point fall gives you 20rs. one point move against your position gives 20rs loss.
E. Brokerage: The borkerage for futures is very less. you'd require to pay 0.03% to 0.05% for each buy/sell transaction. which comes to 3-5 points profit will go to broker and above that the profit is all yours.
F. Rollovers: if you are holding this month contract and want to continue in the next month, you'll sell this month's futures contract and buy the next month's contract.
good luck
I still have a small doubt rizwan at the end of month say nifty expires 30th october then will the margin be still with us
is there any premium collected for futures
if i have exercised a long the by end month should i cover up with a short by buying
pls mention if there are any other taxes like stt, educess etc.
is the brokerage on total turnover
is there any premium collected for futures
if i have exercised a long the by end month should i cover up with a short by buying
pls mention if there are any other taxes like stt, educess etc.
is the brokerage on total turnover
Once your position in Futures is squared, you get back your margin!!!
There is nothing collected as Premium om Futures contract...only margine is collected as detailed by Rizwan.
In futures you just square your position , there is no 'exercising'.
The following link may be of some use to you :
http://www. 4shared. com/file/44137389/8397b5a5/Step_By_Step_Learning.html
There is nothing collected as Premium om Futures contract...only margine is collected as detailed by Rizwan.
In futures you just square your position , there is no 'exercising'.
The following link may be of some use to you :
http://www. 4shared. com/file/44137389/8397b5a5/Step_By_Step_Learning.html
1. nifty expires on 30th october, you'll have the margin returned after the automatic square-off (see 3rd point)
2. premium - in a way premium is already priced into the futures contract, you can see that nifty is trading at 3200 and nifty-futures at a premium of 30 points, i.e., nifty futures are available at 3230.
3. Futures/options contract expires on the last thursday and is settled in cash mostly. so, in futures, you need not buy/cover the short, it will automatically be done by the exchange, if you are in a profit then you'll be given profit+margin and if you are in a loss then margin-loss is given to you. And you can exercise an option (ask for delivery of shares) not a future contract. Either you can cover at a good price or let the exchange cover that for you.
4. Yes, there are small charges turnover etc. which is negligible.
5. Yes, brokerage is on the Total turnover both (buy+sell) sides.
on a personal note, switch to options rather than to futures.
futures = huge profit or huge loss.
options = huge profit or small loss.
2. premium - in a way premium is already priced into the futures contract, you can see that nifty is trading at 3200 and nifty-futures at a premium of 30 points, i.e., nifty futures are available at 3230.
3. Futures/options contract expires on the last thursday and is settled in cash mostly. so, in futures, you need not buy/cover the short, it will automatically be done by the exchange, if you are in a profit then you'll be given profit+margin and if you are in a loss then margin-loss is given to you. And you can exercise an option (ask for delivery of shares) not a future contract. Either you can cover at a good price or let the exchange cover that for you.
4. Yes, there are small charges turnover etc. which is negligible.
5. Yes, brokerage is on the Total turnover both (buy+sell) sides.
on a personal note, switch to options rather than to futures.
futures = huge profit or huge loss.
options = huge profit or small loss.
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