February 6, 2023
Future and Option (Future and Option) is a type of trading (treading) that works in a derivative way

Future and Option (Future and Option) is a type of trading (treading) that works in a derivative way.

A derivative is a contract in which the value of shares is determined by gold. In future and option trading one can make profit even without buying any asset. Which depends on the ups and downs of the share market.

Trading in futures contracts?

Both futures and options contracts are oriented towards the stock market. Suppose you buy stock futures, it is the responsibility of the stock exchange that you will get the stock on the day of delivery at the same price that was fixed at the time of the contract. It does not matter what the share price is at the current time i.e. at the time of issue. In a futures contract, you have to settle the contract.

What is option trading?

If we talk about option contract trading, then the option to buy shares is available here. Suppose the price of one share of ABC Company is Rs.2,100. Now you think that after one month the price of this stock will be Rs 2,200. You pay Rs 200 as premium for the contract and say you will buy the stock for Rs 2,150 after one month. A month later, that stock is worth Rs 2,500. In such a case, the cost of this stock at the time of delivery will be Rs 2,350. Thus you get a profit of Rs 150 per share.

Suppose the share price falls to Rs. 2,000 then you either buy the share at Rs 2,150 or you don’t buy it. In such a case, if you do not buy the stock, you will only lose the premium paid for the contract, i.e. only Rs. 200.

How to Trade Futures and Options?

To start futures and options trading you need to open a trading account with a broking firm registered with BSE and NSE. To open a trading account, visit Upstox where you can trade in F&O.

While logging into the portal of a broking firm, you will find various futures and options contracts. A little research will help you choose the best option. Shares can be traded in F&O on stock exchange, commodities on commodity exchange etc. In futures and options, shares cannot be bought or sold as in the cash market, trading takes place in lots and consists of many shares.

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