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What is ATM (AT The Money) Options?

ATM are those options having Strike near to Spot Price. Current Price and Underlying is near. Example : NIfty is trading at 16970 Put Option : 17100                    ITM 17000                    ATM 16900                    OTM ATM Option has Delta Value 0.50 why ??? Because Probability of Nifty going up or down from Current Price is 1/2 i.e. 50% Call Option : 17100                     OTM 17000                     ATM 16900                     ITM  For Option video : Exercise : Reliance : CMP 2200 Rs PUT Option : 1800 2100 2200 2500 Call Option : 2000 2100 2200 2400 You can Comment here for more updates and Query on any option related Topics.

Currency Derivative basic for beginners ll बहुत पैसा कमाने का अवसर ll

          currency future, also known as FX future, is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the purchase date. On NSE the price of a future contract is in terms of INR per unit of other currency e.g. US Dollars. Currency future contracts allow investors to hedge against foreign exchange risk. Currency Derivatives are available on four currency pairs viz. US Dollars (USD), Euro (EUR), Great Britain Pound (GBP) and Japanese Yen (JPY). Cross Currency Futures & Options contracts on EUR-USD, GBP-USD and USD-JPY are also available for trading in Currency Derivatives segment.

What is Currency Derivatives?
          The term 'Derivatives' indicates it derives its value from some underlying i.e. it has no independent value. Underlying can be securities, stock market index, commodities, bullion, currency or anything else. From Currency Derivatives market point of view, underlying would be the Currency Exchange rate. To put it simply an example of Derivatives is curd which is derived from Milk. Derivatives are unique product, which helps in hedging the portfolio against the future risk. At the same time, derivatives are used constructively for arbitrage and speculation too.
What are the benefits?
Currency derivatives are a bundle of opportunities for a number of players.
It is a new asset class for diversification of investments for all resident Indians.
It gives hedging opportunities to:
Importers and exporters, who can hedge their future payables and receivables,

Borrowers, who can hedge foreign currency (FCY) loans for interest and principal payments, with the need for proof of documented exposure.

 It gives trading opportunities because of its volatility and multiplicity.
 It provides highly transparent rates to traders as it is exchange-traded.

Can currency futures help small traders?

          Yes. The minimum size of the USDINR futures contract is USD 1,000. Similarly EURINR future contract is EURO 1000, GBPINR future contract is GBP 1000 and JPYINR future contract is YEN 1,00,000. These are well within the reach of most small traders. All transactions on the Exchange are anonymous and are executed on a price time priority ensuring that the best price is available to all categories of market participants irrespective of their size. As the profits or losses in the futures market are also paid / collected on a daily basis, the scope of accumulation of losses for participants gets limited.

How are currency prices determined?

          Currency prices are affected by a variety of.....
Economic and
Political conditions,
but probably the most important are.....
Interest rates,
International trade,
Inflation, and
Political stability.
Sometimes governments actually participate in the foreign exchange market to influence the value of their currencies.

What are the factors that affect the exchange rate of a currency? 

A country’s currency exchange rate is typically affected by the supply and demand for the country’s currency in the international foreign exchange market. The demand and supply dynamics is principally influenced by factors like interest rates, inflation, trade balance and economic & political scenarios in the country. The level of confidence in the economy of a particular country also influences the currency of that country.

What are the trading hours on MCX-SX?

Trading in currency futures and option is on all working days from Monday to Friday and is between 9.00 am to 5.00 pm.

What are the various types of margins that are levied to manage the risk?

The trading of currency futures
Maintenance of initial,
Extreme loss, and
Calendar spread margins with the clearing house

Why should one trade in Indian exchanges as compared to international exchanges?

Indian currency futures enable individuals and companies in India to hedge and trade their Indian Rupee risk. Most international exchanges offer contracts denominated in other currencies.

What are the risks involved in currency futures market?

Risks in currency futures pertain to movements in the currency exchange rate. There is no rule of thumb to determine whether a currency rate will rise or fall or remain unchanged.

In which currency are the currency futures contracts settled?

They are settled in cash in Indian Rupees.

What are benefits of spread contract?

Spread contract give users the benefit to enter two calendar contracts simultaneously without the risk of partial (one leg) execution and at a lower impact cost.

Margin in selling 10 lot of call @ 71 and put of 69 both May expiry USD/INR

Almost less than 1000 rs margin required in Currency Derivative. More, Talk in next Post.


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