What are derivatives?

       Derivatives are the financial instruments whose value or price or cash flow is derived from the numerical value related to an underlying or a reference asset. Derivatives open an opportunity for investor to get profit in up and down trend market with less money and high returns. Derivatives trading serve as a tool for investment risk management, speculation and also hedge your investment. They also involve greater risk that varies depending on the underlying asset price changes.

       At present, derivatives products include: SET50 Index Futures, SET50 Index Options, Single Stock Futures, Gold Futures, Interest Rate Futures, USD Futures, Sector Index Futures and Rubber Futures.

              What are futures?

       Futures are standardized contract for the future settlement and/or delivery of a given quantity of the underlying product or cash at a specified price on a specified future date. Buyers and sellers of futures contracts have obligations to accept/make the delivery of the underlying product or cash on the specified date.

              What are options?

       Options are derivatives instruments that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the corresponding obligation to fulfill the transaction. And buyers (option holders) need to pay a premium to sellers for the option's right.
- A call option gives the holder the rights to buy.
- A put option gives the holder the rights to sell.
So, an option is a choice. If you buy a call or put option, you can choose to either buy or sell a stock at a specific price for a pre-determined period of time. The price is known as the strike price. The life of an options contract is determined by the expiration date. After the option expires, it no longer exists. Each contract can be defined by its underlying security, the strike price of the option, and the expiration date. Options can be used to speculate or to hedge.

              Contract Month Symbol

              Series Name

              Mark to market

      Mark to market is the adjustment of current value of futures contract by their reference market prices. It records the price or value of the security, portfolio or account on a daily basis to calculate profits or loss or to confirm that margin requirements are being met.

       - If investors make profit, mark to market will cause margin to increase.
       - If investors make loss, mark to market will cause margin to be reduced.

If margin's level is reduced to the maintenance margin level, investors will be required (Call Margin) to add margin money until it reaches the level of initial margin.

Type of settlement Price

       - Daily Settlement Price is the price for calculating mark-to-market at the end of trading day. The price comes from average prices of futures contact.
       - Final Settlement Price is the price for calculating on Last Trading day. The price comes from average prices of SET50 Index.

              Held futures contract till expiration date

       Investors held the futures contract till the expiration date, investors will be automatically forced close the position. The futures contract will realize gain or loss based on the final settlement price. e.g. The final settlement price of SET50 Index Futures shall be the numerical value of the SET50 Index, rounded down to the nearest two decimal points as determined by the exchange, and shall be the average value of the SET50 Index taken during last 15 minutes plus the closing index value, after deleting the three highest and three lowest values.

*The final Settlement price for other underlying assets, investors can view the contract specification in each underlying assets.

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