uTrade AlgosFutures and options (F&O) are financial derivatives, meaning their value is derived from an underlying asset, such as stocks, commodities, or currencies. They offer traders a way to speculate on the future price movements of these assets, hence widely used for hedging and portfolio diversification.
Future Trading:
A futures contract is an agreement between two parties to buy or sell an asset at a predetermined price on a specific future date. It’s a binding obligation, meaning both parties are obligated to fulfil the contract.
Example: Suppose you believe the price of a stock will rise in the next month. You can enter a futures contract to buy the stock at a set price. If the stock price increases, you get an opportunity to sell the contract at a higher price.
Options Trading:
An options contract gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specific timeframe. There are two types of options:
Call Options: Gives the buyer the right to purchase the asset at the strike price.
Put Options: Gives the buyer the right to sell the asset at the strike price.
Example: If you think a stock’s price will rise, you can buy a call option. If the stock’s price goes above the strike price, you can get an opportunity to sell it at a higher premium.
Futures contracts tend to be riskier than options contracts because they bind you to an obligation to buy or sell the underlying asset, regardless of market conditions. You can use Share India’s robust trading platform to manage risk effectively. With Share India, you gain access to seamless execution, advanced tools, and a supportive trading environment to make the most of F&O trading opportunities.
To begin your F&O trading journey, open a Demat and trading account with Share India by visiting.
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.