We often do not understand the jargons associated with derivatives. To understand the difference between these terms, watch Basics of Derivatives Part- 2. In this session Investment Advisor, Mr. Shomesh Kumar explains the concept like Betting, Speculation, Trading & Investment. About our guest: Mr. Shomesh Kumar is an experienced investment advisor having more than 20 years of experience in the stock market. (SEBI Registered No. INA200015088) Discussion pointers: - Difference Between Betting, Speculations, Trading & Investment - Benefits of Derivatives What are Derivatives? - Downsides of Derivatives - Options Greeks Advance Strategies - Call Ratio Spread - Put Ratio Spread - Collar - Butterfly - Interpretation of F&O Indicators What are Derivatives? In simple term the derivative means you predict and betting on future weather this will happen or not on the bases of current situation and your own interest. Derivatives are securities whose value is derived from the underlying security. Examples of security: Such as bonds, stocks, currencies, commodities, an index or temperature. Types of Derivatives: Ø Forward Ø Future Ø Options Ø Warrants Necessity of Derivatives: Ø Counterparty Ø Common Asset Ø Market Ø Contractual Agreement Future Contract- Future contract is an obligation to buy or sell a specific quantity and quality of a commodity or security at a certain price on a specified future date. They are standardized, and exchange traded. Some futures contracts may call for physical delivery of the asset, while most are settled in cash. Option Contract - An option is a type of derivative where the buyer has the right, but not the obligation, to buy (call option) or sell (put option) a commodity or financial asset at a specified price (the strike price) during a specified period of time in future.