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How Is Actuals Applied in Options Market?

March 8th, 2008 · No Comments

What Does Actuals Mean?
Actuals refer to the underlying commodity that forms the base of a futures contract. It means a commodity which is actually bought and sold in physical market or in the derivative market and underlies the futures contract. The examples of this include gold, wheat, oil etc.

How Is Actuals Applied in Options Market? 
Actuals form a part of trading in either derivatives market or physical market. In case of physical market set up, such a commodity is exchanged for either cash or some other commodity. This transaction involves an exchange between two or more parties as well as a delivery of the goods transacted. In case of transaction in the futures market, two parties are involved in an exchange traded contract where in delivery of a particular commodity, quantity and quality is agreed upon at a later date by a party and accepted by the other at a said price. Here delivery of the commodity does not happen immediately and hence the positions can be sold before the delivery date comes.

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