InvestorQ : What are some of the important basic concepts of futures and options that I need to be aware of?
Nishant Chandani made post

What are some of the important basic concepts of futures and options that I need to be aware of?

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Abhi Yadav answered.
1 year ago
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Futures offer the advantage of trading equities with a margin. But the risks are unlimited on the opposite side irrespective of whether you are long or short on the futures. When it comes to options, the buyer can limit losses to the extent of the premium paid only. Since options are non-linear, they are more amenable to complex futures and options strategies. When you buy are sell futures you are required to pay upfront margin and mark-to-market (MTM) margins. When you sell an option also you are required to pay initial margins and MTM margins. However, when you buy options you are only required to pay the premium margins. That is all!

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