Gm Finance

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hello friends what is the difference between option and future option in the share market.
From China ,
The theroies and practice remain the same. lets take the case of Hindustan Lever. If you deal in future , you would have a future price of say Rs 220-230 for Oct Contract. One has to buy min one contract and about 20% of contract value, say Rs 80,000 will be kept as margin. Now depending on stock price movement the contract willl be settled on Oct closure. If on contarct closure date, the price moves upward, you gain by differential and vice versa. Thus the chances of loss and gains are unlimited.

In Option, it is not so, say if you expect that price will go above 230 , you can buy/sell an option z( call or put) ddepending on your strategy. if you write an option, then you get premium , in which case your loss is unlimited.

However, if you buy an option your losses are limited to the extent of ption premium paid, but gains are unlimited.

pl go thru carefully the daily movement in future prices or option premium of a few stocks to get a better understanding or as they say u dont learn anything unless u burn your fingers...happy gambling...

From India , New Delhi
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