uTrade AlgosFutures and options are derivatives that are commonly traded in the stock market. Knowing about types of futures and options is necessary to understand how to trade in the F&O segment. Here’s a breakdown of various types of futures and options contracts.
Types of futures:
Stock Futures: These are contracts to buy or sell a specific stock at a predetermined price on a future date. They are based on individual stocks.
Index Futures: These are contracts based on an index like Nifty or Sensex. They allow traders to speculate on the movement of the entire market or specific sectors.
Commodity Futures: These are futures contracts based on commodities like gold, oil, wheat, etc. They allow you to trade based on the future price of the commodity.
Currency Futures: These are futures contracts in which currencies are the underlying assets. You can trade based on the future exchange rate between two currencies.
Interest Rate Futures: Futures contracts that are based on interest rates, such as government bonds. These allow you to hedge against or speculate on changes in interest rates.
Types of Options:
Call Option: A contract that gives the buyer the right (but not the obligation) to buy an underlying asset at a specific price (strike price) within a specific time period. The buyer expects the asset’s price to rise.
Put Option: A contract that gives the buyer the right (but not the obligation) to sell an underlying asset at a specific price within a specific time period. The buyer expects the asset’s price to fall.
Stock Options: These are options contracts based on individual stocks. They give traders the right to buy or sell a particular stock at a specific price before the expiration date.
Index Options: Options based on market indices, like the Nifty or Sensex. These work similarly to stock options but are based on the performance of the entire index rather than an individual stock.
Currency Options: These are options based on currency pairs, like USD/INR. Traders can buy or sell the right to exchange one currency for another at a specific rate.
Commodity Options: These options are based on commodities like gold, silver, or oil. You can buy or sell the right to trade a commodity at a certain price within a specific timeframe.
At Share India, we offer a comprehensive range of Futures and Options (F&O) to help you diversify and optimise your trading strategy. Simply open a FREE Demat account with us and begin your F&O trading journey at affordable prices.
If you need any support, you can contact the Share India support team via email at support@shareindia.com or by phone at 1800 203 0303.