The history of stock markets tells us that they will surprise us in the future
We all trade in equity in anticipation of higher returns. But the market movements may lead to a rise as well as fall in the price. Stock market offers a way out in form of Derivatives. Derivatives are wonderful investment avenue which gives you the flexibility and liquidity of equity investment and at the same time allows you to secure yourself against probable downside market movements in future.
Investing in derivatives enables you to leverage your current position and hedge the risk by safeguarding yourself against potential losses that unfavorable market movements may bring in future.
Ratnakar facilitates Currency Futures, Currency Trading, as well as the quintessential forms of derivative trading - Futures and Options. Futures is a contract/agreement between two parties for the purchase/sale of fixed quantity of assets for a mutually agreed upon price at a predetermined future date. Options on the other hand, is a contract/agreement similar to Futures but the difference lies in the fact that the parties are not under any obligation to fulfill the terms of the contract. In other words, both the parties have the ‘option’ to not to buy/sell the asset at the predetermined date in future despite of the agreement.
A few well-known strategies in derivatives trading:
- Protect the downside of your portfolio / stock by paying a premium – a.k.a Protective Put
- Create straddles and strangles in various stocks / index