Points of banking are financial instruments which are used by the investors for the purposes of making money from the market. It is a type of derivative instrument which are used for hedging or trading purposes.
The points of banking are used for making short-term profits or losses in the stock market. They are traded on the secondary markets like the options exchange. They are the most important instruments to trade, which are used by the professional investors.
A point of banking is similar to the options, it is an investment that has the same characteristics as the option but it is not traded on the options exchange.
What Are Points Of Banking?
Points of banking are derivatives instruments that are traded on the stock exchange. A point of banking is basically a contract between the buyer and seller.
The buyer pays the seller for the right to buy a certain amount of shares at a specific price. If the share price rises then the buyer will make a profit and if it falls then he will lose money.
The buyer makes money when the price of shares rises and loses money when the price drops. The point of banking can be traded in many different ways, like through the futures market, the options exchange or the stock market.
Types Of Points Of Banking
There are two types of points of banking: cash settled and physical settlement.
Cash Settled Points Of Banking
Cash settled points of banking are the derivatives that are used for trading purposes. Cash settled points of banking are used for making profits or losses from the stock market. These points are traded on the stock exchange.
Physical Settlement Points Of Banking
Physical settlement points of banking are the derivatives that are used for hedging purposes. Physical settlement points of banking are used to protect the investors against unexpected share price movements.
Features Of Points Of Banking
The points of banking have many features which make them very useful. The main features are:
They are liquid instruments – They can be bought and sold quickly, which means that they can be used to make profits and losses quickly.
They can be traded in many different ways – Points of banking can be traded in many different ways like through the futures market, the options exchange or the stock market.
They are easily available – They are easily available in all the stock exchanges of the world.
Conclusion:
Points of banking are financial instruments that are used by the investors for the purposes of making money from the stock market. They are a derivative instrument which are used for hedging or trading purposes.
