Welcome to Stock Markets 101. Whether you are new to investing, or just want to brush up on the basics, this page will provide a helpful introduction to the most popular products traded on the stock market. Please click on the links below to learn more.
Once you have familiarised yourself with the products above, you will be ready to visit our Trading Strategies page where you can find the strategy that best suits you.
Shares represent partial ownership in a company. When you purchase shares in a company, you own part of that company. Shares may only be traded in publicly listed companies. As a shareholder, you are entitled to the following benefits:
From a company's perspective, issuing shares is an effective way to raise capital to fund business growth. It can also provide a market valuation for a company, legitimising their perceived worth and future potential.
An Exchange Traded Option (ETO) or Option is a derivative, meaning that its value is derived from another instrument. In the case of an equity Option, its value is based on the underlying share. In the case of an index Option, its value is based on the underlying index.
An Option is a contract between two parties giving the buyer the right, but not the obligation, to buy or sell a security at a predetermined price (strike) on or before a predetermined date (expiry). To acquire this right, the buyer of the contract pays a premium to the seller (writer) of the contract.
Type of Options:
Trading Options comes with many advantages. For one, you may gain exposure to shares at only a fraction of the share price. Options can even allow you to enjoy limited risk with unlimited upside potential.Additional Document Downloads
A Warrant is a derivative security that provides the buyer with the right, but not the obligation, to buy or sell a security at a predetermined price (strike) on or before a predetermined date (expiry). However, unlike an Option, a Warrant is issued and guaranteed by the company and consists of non-standardised features. These features vary between warrant types, and are modified to meet the needs of a wide range of investors.
Types of Warrants:
Similar to most derivative products, Warrants can provide an investor with great leverage and flexibility. The extremely customisable nature of their characteristics make Warrants an ideal solution for an array of investment purposes.Additional Document Downloads
CFD is an abbreviation for Contract for Difference – and CFDs are simply that: a contract where the buyer is credited or liable for the difference in value of a particular financial instrument between the time a position is opened and closed. When you buy a CFD, you own a contract over the movement in the price of the underlying asset that is revalued in real time. The structure of CFDs allows you to gain exposure to the performance of the underlying asset – without having to own the underlying asset itself. CFDs can be traded on an extensive range of markets including shares, commodities, indices, and currencies.
It is important to be aware that there are two types of models used by CFD providers:
The most common advantage associated with CFDs is the power of leverage – as you can trade CFDs with margins from as low as 1%.
A Futures contract is an agreement to buy or sell a specified asset at a pre-determined price (futures price) and date in the future (delivery date). However, unlike an Option, a Futures contract requires the buyer to purchase the specified asset (or the seller to sell the specified asset) at the end of the contract. In other words, as the buyer of an Option may decide to exercise the contract, the buyer of a Futures contract must fulfill the contract on the settlement date. Depending on the settlement terms, physical delivery of the asset may be replaced by the cash equivalent. Futures contracts can be traded over a wide a range of financial instruments including indices, currencies, commodities and bonds.