Do the options and futures behave the same way as their underlying securities?

[rocky9281]

1)Do the derivatives always have the same price as the underlying?
2) I am new to derivatives n was thinking hw 2 take advantage of the falling stocks..u know ..we r not allowed to short sell stocks for more than a day's period..what i realised is that we can short sell the stocks(the underlying) for multiple days thru the derivatives..am i correct?
Thanks in advance

 

[zman492]

<<<Do the options and futures behave the same way as their underlying securities?>>>

No. For example, it is quite possible under certain circumstances to have the price of a put option to go down even though the price of the underlying security went down. The price of a derivative depends upon more than the price of the underlying security.

<<< am new to derivatives n was thinking hw 2 take advantage of the falling stocks..u know ..we r not allowed to short sell stocks for more than a day's period..>>>

In the United States there is no restriction on the time you can leave a short position open. If you are trading in another country it is possible that such a restriction would exist.

<<<i realised is that we can short sell the stocks(the underlying) for multiple days thru the derivatives..am i correct?>>>

You can maintain a bearish (negative delta) position for multiple days through derivatives. You are not actually short the underlying, but you still make a profit as the price of the underlying continues going down.