Share Market Investment

Shares are purchased and sold on the primary and secondary share markets. To invest in the share market, investors acquire a call option, which is the right to buy a share, or a put option, which is the right to sell a share. In general, investors buy put options if they expect prices to rise, and call options if they expect prices to fall.
For currency rate exchanges, investors may buy a swap option. The value of a derivative depends on the value of the underlying asset.

The various classifications of derivatives relevant to share market investment are:
Futures Contract
Forward Contract
Option Contract

A forward contract is agreements between two parties purchase or sell a product in the future, at a price determined now. This mutual agreement satisfies the profit motive of both the buyer and seller, and the uncertainties and risks of price fluctuations in the future are aborted.
A future contract is different from a forward contract in the sense that the former requires the presence of a third party and the commitment for trade is simply notional.

Before a share is chosen for investment, a technical analysis of the share is performed. The price and volume of a share over a period of time are tracked and then a business plan is constructed. A fundamental analysis involves a close study of the company associated with the share, and its performance over time. The fundamental analysis is important for the share market investor.

The price levels of a traded share are as follows:
Opening Price: This is the price at which the market opens. In other words, it is the price of the first transaction.
Closing Price: This is the price at the time of closing of the market or the price of the last trade.
Intra-Day High: This denotes the maximum price at which the share was traded in the day.
Intra-Day Low: This is the minimum price at which the share traded in the day.


More Information Related to Investment
Meaning of Investment Types of Investment Essential of Investment
Investment Planning Investment Return Online Investment
Foreign Direct Investment Foreign Institutional Investment Institutional Investment
Investment Advice Best Investment Options High Yield Investment
Investment Companies Investment Banks Investment Brokerage
Property Investment Investment Management Investment Strategies
Global Investment Indian Investment

Last Updated on : 5th July 2013