Futures & Options

What is Futures & Options?

Buying and selling derivative products (futures and options) is referred to as derivatives trading. The goal is to use nominal margins to hedge portfolio risks and create significant gains from price volatility. Derivatives are financial instruments that derive their value from underlying assets such as stocks, bonds, currencies, and commodities. You'll need a F&O account to trade derivatives.

About Futures & Options

Within the equity market, there is another segment which is called the derivatives market. Futures and Options (F&O) are the most common derivative contracts where two parties enter into a contract. It is speculative in nature and considered a safer option than the share market.

The basic difference between Futures & Options

  • A future contract requires a buyer to purchase shares and a seller to sell shares on a specified future date
  • Option contract gives the buyer and seller the right, but not the obligation to sell or purchase
  • So, if needed, you can opt out of your options any given time

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