Guide to understand Equity, Commodity, Currency, Futures and Options.
                     GUIDE TO UNDERSTAND EQUITY, 
COMMODITY, CURRENCY, FUTURES, 
AND OPTIONS
EQUITY
• Equity represents the shareholders' stake in the company, identified on a 
company's balance sheet. 
• The calculation of equity is a company's total assets minus its total liabilities, 
and is used in several key financial ratios such as ROE.
Source: Investopedia
EQUITY EXAMPLE
• For example, if someone owns a car worth $9,000 and owes $3,000 on the 
loan used to buy the car, then the difference of $6,000 is equity.
Source: Wikipedia
COMMODITY
• A commodity is a basic good used in commerce that is interchangeable with 
other goods of the same type. 
• Commodities are most often used as inputs in the production of other goods 
or services. 
Source: Rockfort Markets
COMMODITY EXAMPLE
• Soft commodities are goods that are grown, such as wheat, or rice. 
• Hard commodities are mined. Examples include gold, silver, helium, and oil. 
• Energy commodities include electricity, gas, coal and oil.
Source: DNA India
CURRENCY
• Currency is a medium of exchange for goods and services. In short, it's money, 
in the form of paper or coins, usually issued by a government and generally 
accepted at its face value as a method of payment.
Source: Investopedia
FUTURES
• In finance, a futures contract is a standardized legal agreement to buy or sell 
something at a predetermined price at a specified time in the future, between 
parties not known to each other. 
Source: The Economic Times
PROS OF FUTURES
• Investors can use futures contracts to speculate on the direction in the price of 
an underlying asset.
• Companies can hedge the price of their raw materials or products they sell to 
protect from adverse price movements
Source: Investopedia
CONS OF FUTURES
• Investors have a risk that they can lose more than the initial margin amount 
since futures use leverage
• Investing in a futures contract might cause a company that hedged to miss out 
on favorable price movements
Source: Investopedia
OPTIONS
• An option is a contract which conveys its owner, the holder, the right, but not 
the obligation, to buy or sell an underlying asset or instrument at a specified 
strike price prior to or on a specified date, depending on the form of the 
option.
Source: visiontour
OPTIONS AS DERIVATIVES
• Options belong to the larger group of securities known as derivatives. A 
derivative's price is dependent on or derived from the price of something else. 
• Examples of derivatives include calls, puts, futures, forwards, swaps, and 
mortgage-backed securities.
Source: Karvy Online