Answer: Options- These are the derivative
contracts. Options gives the buyer, the right but not the
obligation to buy or sell an underlying asset at a specified
price.
Types of options:
- Call
- Put
- Cash settled options
- Weekly options
- Exotic options
Unique contribution of options in comparison with stock and
futures contracts- Few points are a following:
- Options require very less margin, if you buy the options, it
will only require upfront premium that you need to pay, in futures
and stocks, there is more margin requirements. So options are cost
effective as compare to stock and futures.
- Options provide better return in less capital and buying
options brings limited risk that is limited to the net premium
paid.
- Options have many strategies that can be used for hedging
purpose. Investors can earn higher returns with the help of options
strategies.