TERMINOLOGIES

DEMAT Account:
In Indias banking terminology, the term DEMAT Account refers to a deposit made at an Indian
financial institution that can be used for investing in shares of stocks and other financial assets.
Securities are held electronically in a DEMAT Account, thereby eliminating the need for physical
paper certificates.
In India, shares and securities are held electronically in a dematerialized (or "Demat") account,
instead of the investor taking physical possession of certificates. A Dematerialized account is
opened by the investor while registering with an investment broker (or sub-broker). The
Dematerialized account number is quoted for all transactions to enable electronic settlements
of trades to take place. Every shareholder will have a Dematerialized account for the purpose of
transacting shares.

Trading Account:
In investment terminology, the term Trading Account refers to funds and/or securities
deposited with a financial institution or broker for the purpose of speculation. A Trading
Account is usually overseen by an investment dealer, fund manager or personal trader.
An account similar to a traditional bank account, holding cash and securities, and is
administered by an investment dealer.
An account held at a financial institution and administered by an investment dealer that the
account holder uses to employ a trading strategy rather than a buy-and-hold investment
strategy.

Equities
An instrument that signifies an ownership position, or equity, in a corporation, and represents a
claim on its proportionate share in the corporation's assets and profits. A person holding such
an ownership in the company does not enjoy the highest claim on the company's earnings.
Instead, an equity holder's claim is subordinated to creditor's claims, and the equity holder will
only enjoy distributions from earnings after these higher priority claims are satisfied. also called
equities or equity securities or corporate stock.

FUTURES
A standardized, transferable, exchange-traded contract that requires delivery of a commodity,
bond, currency, or stock index, at a specified price, on a specified future date. Unlike options,
futures convey an obligation to buy. The risk to the holder is unlimited, and because the payoff
pattern is symmetrical, the risk to the seller is unlimited as well. Dollars lost and gained by each
party on a futures contract are equal and opposite. In other words, futures trading is a zerosum game. Futures contracts are forward contracts, meaning they represent a pledge to make a
certain transaction at a future date.

OPTION
A financial derivative that represents a contract sold by one party (option writer) to another
party (option holder). The contract offers the buyer the right, but not the obligation, to buy
(call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price)
during a certain period of time or on a specific date (exercise date).
The right, but not the obligation, to buy (for a call option) or sell (for a put option) a specific
amount of a given stock, commodity, currency, index, or debt, at a specified price (the strike
price) during a specified period of time. For stock options, the amount is usually 100 shares.
Each option has a buyer, called the holder, and a seller, known as the writer. If the option
contract is exercised, the writer is responsible for fulfilling the terms of the contract by
delivering the shares to the appropriate party. In the case of a security that cannot be delivered
such as an index, the contract is settled in cash

CALL OPTION:
Call options provide the holder the right (but not the obligation) to purchase an underlying
asset at a specified price (the strike price), for a certain period of time. If the stock fails to meet
the strike price before the expiration date, the option expires and becomes worthless. Investors
buy calls when they think the share price of the underlying security will rise or sell a call if they
think it will fall. Selling an option is also referred to as ''writing'' an option.

PUT OPTION:
Put options give the holder the right to sell an underlying asset at a specified price (the strike
price). The seller (or writer) of the put option is obligated to buy the stock at the strike price.

Put options can be exercised at any time before the option expires. Investors buy puts if they
think the share price of the underlying stock will fall, or sell one if they think it will rise. Put
buyers - those who hold a "long" - put are either speculative buyers looking for leverage or
"insurance" buyers who want to protect their long positions in a stock for the period of time
covered by the option. Put sellers hold a "short" expecting the market to move upward (or at
least stay stable) A worst-case scenario for a put seller is a downward market turn. The
maximum profit is limited to the put premium received and is achieved when the price of the
underlyer is at or above the option's strike price at expiration. The maximum loss is unlimited
for an uncovered put writer.

BUYING OPTIONS
When you buy equity options you really have made no commitment to buy the underlying
equity. Your options are open. Here are three ways to buy options that demonstrate when each
method might be appropriate:
1)Hold until maturity then trade: This means that you hold onto your options contracts until the
end of the contract period, prior to expiration, and then exercise the option at the strike price.
2)Trade before the expiration date.You exercise your option at some point before the
expiration date.
3)Let the option expire.You dont trade the option and the contract expires.
Again, in each of the above examples, you will have paid a premium for the option itself. The
cost of the premium and any brokerage fees you paid will reduce your profit. The good news is
that, as a buyer of options, the premium and commissions are your only risk. So in the third
example, although you did not earn a profit, your loss was limited no matter how far the stock
price fell

SELLING OPTIONS
In contrast to buying options, selling stock options does come with an obligation - the
obligation to sell the underlying equity to a buyer if that buyer decides to exercise the option
and you are "assigned" the exercise obligation. "Selling" options is often referred to as "writing"
options.
When you sell (or "write") a Call - you are selling a buyer the right to purchase stock from you at
a specified strike price for a specified period of time, regardless of how high the market price of
the stock may climb.

Covered Calls
One of the most popular call writing strategies is known as a covered call. In a covered call, you
are selling the right to buy an equity that you own. If a buyer decides to exercise his or her
option to buy the underlying equity, you are obligated to sell to them at the strike price whether the strike price is higher or lower than your original cost of the equity. Sometimes an
investor may buy an equity and simultaneously sell (or write) a call on the equity. This is
referred to as a "buy-write."
Uncovered Calls
In an uncovered call, you are selling the right to buy an equity from you which you dont
actually own at the time.

CURRENCY FUTURES
A transferable futures contract that specifies the price at which a currency can be bought or
sold at a future date. Currency future contracts allow investors to hedge against foreign
exchange risk.
Because currency futures contracts are marked-to-market daily, investors can exit their
obligation to buy or sell the currency prior to the contract's delivery date. This is done by
closing out the position. With currency futures, the price is determined when the contract is
signed, just as it is in the forex market, only and the currency pair is exchanged on the delivery
date, which is usually some time in the distant future. However, most participants in the futures
markets are speculators who usually close out their positions before the date of settlement, so
most contracts do not tend to last until the date of delivery

CURRENCY OPTION
A contract that grants the holder the right, but not the obligation, to buy or sell currency at a
specified exchange rate during a specified period of time. For this right, a premium is paid to
the broker, which will vary depending on the number of contracts purchased. Currency options
are one of the best ways for corporations or individuals to hedge against adverse movements in
exchange rates.
Investors can hedge against foreign currency risk by purchasing a currency option put or call.

COMMODITY FUTURES
An agreement to buy or sell a set amount of a commodity at a predetermined price and date.
Buyers use these to avoid the risks associated with the price fluctuations of the product or raw

material, while sellers try to lock in a price for their products. Like in all financial markets,
others use such contracts to gamble on price movements.
Trading in commodity futures contracts can be very risky for the inexperienced. One cause of
this risk is the high amount of leverage generally involved in holding futures contracts