Derivatives, Futures & Options
2 terms
Forward Contract
Derivatives, Futures & Options
qualitative
A privately negotiated agreement to buy or sell an asset at a set price on a future date, not traded on an exchange.
Test: terms are bilaterally negotiated, the contract is not exchange-traded, and settlement occurs directly between the parties
Futures Contract
Derivatives, Futures & Options
₹
A standardised exchange-traded agreement to buy or sell an underlying asset at a set price on a set future date.
Contract Value = Futures Price x Lot Size; Profit or Loss = (Exit Price - Entry Price) x Lot Size, sign adjusted for direction