Futures & Options Trading

Options are generally considered less risky than futures due to the limited downside risk. The maximum loss in options is limited to the premium paid for the contract. However, both F&O trading involves risk and requires a thorough understanding of market dynamics and risk management strategies.

F&O trading offers several advantages:

• Leverage: Control a larger position with a smaller amount of capital, potentially amplifying profits.
• Hedging: Mitigate risk in your portfolio by taking opposite positions in the F&O market.
• Income Generation: Sell options contracts to earn premium income.
• Diversification: Gain exposure to various asset classes without directly owning them.

The key difference lies in obligation. In futures, both parties are obligated to fulfill the contract at the expiry date, regardless of the market price. In options, the buyer has the right, but not the obligation, to exercise the contract. This makes options more flexible, but they usually cost more due to the premium paid.

F&O trading involves speculating on the future price movements of the underlying asset. Traders enter into futures contracts to either buy or sell the asset at a set price in the future. With options, traders can buy call options if they anticipate a price rise or put options if they expect a price decline.

Futures and Options (F&O) are derivative contracts that derive their value from an underlying asset, such as stocks, indices, or commodities. Futures contracts are agreements to buy or sell the asset at a predetermined price on a future date, while Options contracts give the holder the right, but not the obligation, to buy (call option) or sell (put option) the asset at a specific price by a certain date.