Page 152 - DCOM510_FINANCIAL_DERIVATIVES

Unit 9: Trading Futures and Option

 NEAT-F&O Trading System: The futures & options trading system of NSE are called Notes
NEAT-F&O trading system.
 Participants: A participants is a client of trading members like it financial institutions.

 Scalpers: A scalper trades in and out of the market many times during the day, hoping to
make a small profit on a heavy volume of trades.

9.6 Review Questions

1. Briefly explain futures & options trading system.
2. Write a note on NEAT-F&O trading system.
3. “NEAT-F&O trading system supports an order driven market and provides complete
transparency of trading operations.” Elaborate.
4. Clearing members carry out risk management activities and confirmation/inquiry of
trades through the trading system. What are the other parties of trading system?

5. Why do we need to trade a futures contract?
6. Write about the four parties/entities in the trading system.
7. Describe about the various types of traders.
8. What is a scalper’s and day trader?
9. Write down the difference between scalper’s and day trader.
10. “In the F&O trading software, a trading member has the facility of defining a hierarchy
amongst users of the system.” Discuss.
11. Explain the client broker relationship in derivative segment.
12. “The system allows the trading members to enter orders with various conditions attached
to them as per their requirements.” Elaborate.

Answers: Self Assessment

1. NEAT-F&O 2. Participants
3. NSCCL 4. Professional
5. Financial institutions 6. Scalpers
7. Position trader 8. True

9. False 10. False
11. True 12. True
13. True 14. Day order
15. Trigger price

9.7 Further Readings

Books Anderson, R W and K McKay (2008). Derivatives Markets. Freixas.
Apte, P.G. International Financial Management. Tata McGraw-Hill Publishing

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