Explanation:

In the derivative market trading is done mainly through two instruments – the Future contract and the Option contract. In both these types of contracts the stocks are bought and sold in lot. The number of stocks for each lot depends on the valuation of the stock and the valuation of the lot is determined by the number of the stocks in a lot multiplied with the current market price of the stock. For trading in derivative market you have to buy either the future contract or the option contract. In a future contract you are bound to close the deal within a specific time and at a fixed arte. While in case of option contract you can also choose to ignore the contract.