Both, futures and options contract have an expiry date beyond which the contracts become worthless. In case of futures you can buy the security for specified price in cash on the expiry date, but in options your contract becomes worthless if the options contract terms are not met.
E.g. if the current price of a stock is higher than the strike price of the put contract on expiry date, you lose the whole premium amount paid.
5. Some stock market terms worth noting for newbies:
Arbitrage – Simultaneous buying and selling of shares of a company on different exchanges to earn a profit from price gap between the exchanges.
E.g. suppose Reliance Industries is trading for Rs. 1,000 on NSE and Rs. 1,003 on BSE. To do an arbitrage trading one has to buy on NSE and sell on BSE until the prices on both exchanges are same or arbitrage is no longer profitable due to brokerage.
Bull market – Common term to describe rising prices of the overall market.
Bear market – Common term to describe falling prices of the overall market.
Compound annual growth rate (CAGR) – Representative returns of a fluctuating asset class over a specified period of time more than one year.
To calculate CAGR quickly you can use our free online calculator or app.
Now that you’ve known so much about stock market, check out this list of “Richest people in the world“. Nine out of ten people in the list own their wealth in the form of shares of a publicly listed company.
We recommend watching these videos to get better insight about the stock market.
Stock Market for Beginners | जानिए शेयर मार्केट का A to Z | Hindi – FinnovationZ.com
How The Stock Exchange Works (For Dummies) – Kurzgesagt – In a Nutshell
Trading 101: What is the Stock Market? – ClayTrader
We recommend reading these books from amazon before investing serious money in the stock market.
The Intelligent Investor (English) Paperback – 2013 (Get from Amazon – US / India) – by Benjamin Graham (Warren Buffet was inspired by him)
Security Analysis: Sixth Edition, Foreword by Warren Buffett (Get from Amazon – US / India) – by Benjamin Graham
Common Stocks and Uncommon Profits and Other Writings (Wiley Investment Classics) (Get from Amazon – US / India) – by Philip A. Fisher
(Note: Warren Buffet’s investment style is inspired 85% by Benjamin Graham and 15% by Philip A. Fisher)
If you’re looking for analysis of various Indian, European, and American companies make sure to check out Dr. Sagar RV’s videos. He makes really good analysis videos and occasionally shares his own portfolio. Although he has switched to making videos in Hindi, you can still learn what he is saying through subtitles.
BTW, I wouldn’t recommend copying his portfolio or anyone’s for that matter because investors put their money with an expectation, and then they also occasionally exit their investments when its not met. Your expectations may be different and the news of their exit is definitely not going to reach you until much later. So, make sure you know what you’re doing. It is something that I think is important to know for anyone to make money in the stock market.
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