Derivatives markets: Stock and futures options might be more similar than you think

investment banking course


People who don’t know a lot about the derivatives market might not be aware of the factors that make futures and stock different. There are some similarities between stocks and futures but they are usually known for their differences. To understand the derivatives markets much better, you will have to take some Investment banking courses.

If you want to understand the securities market better, you will have to understand the basics of stocks and futures. You can try and learn investment banking from the online courses that we provide if you want to make a career in investment banking.

Similarities between Stocks and Futures

The most prominent commonality between the stocks and futures is that they are traded at an organized and legal exchange. You can short sell futures, and the same is applicable for stocks. However, a short sell in the case of stocks can only be made when the stock price goes up the tick.

A course in investment banking will give you a better understanding of how stock and future options have several similarities along with their differences. These securities have several overlaps, which makes it essential for you to understand the involved nuances.

Both of these instruments allow you to diversify your portfolio; stocks and futures can be used to invest in various industries and areas. Furthermore, both forms of securities are readily available. You can usually buy and sell stocks on the spur of the moment, giving you immediate access to your funds.

The futures market is also quite liquid, with futures contracts changing hands regularly. Stocks and futures can also be used to generate cash. Dividends are a common source of current income for many stocks. Because futures contracts are marked to market daily, they generate cash flow, positive or negative.

The other prominent feature of both of these securities is that they are traded through a middleman like a broker in most cases. Also, in both of these investments, one of the primary focuses is exposure to the physical assets. You receive a contract or a certificate when you get into a future contract and when you buy a share. We have looked at some similarities. Now, let's look at some of the differences between the two securities.

Differences between Stocks and Futures

You are not investing in a corporation when you buy futures. Instead, you're purchasing a contract that gives you access to real assets such as maize, soybeans, coffee, or oil. Futures contracts can be bought for stocks, bonds, currencies, and even the weather. You may have a share certificate in your hand, or at the very least, see the security displayed in your online account if you invest in stocks.

When you decide to invest in equities, the number of shares available is limited until the firm sells more on the open market. Stocks don't usually expire when a company is still operating. For long-term equities investors, "buying and holding" is frequent. On the other hand, futures contracts require you to promise to buy or sell a commodity at a future date. It's not about buying and holding with futures; instead, it's a technique for entering and exiting the market.


We at Imarticus provide the best courses in the finance domain that will help you gain the required expertise and become a seasoned professional. You can take up the Certified Investment Banking Operations Professional that we offer if you want to know investment banking in and out. 

best investment banking certification courseThe CIBOP courses that we offer are designed to provide both basic and advanced knowledge on everything involved in the investment banking field. The course will cover everything on the Derivatives Markets. 

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