Futures and options trading
in India is becoming a preferred option amongst the traders. Many brokers today are telling their clients to buy futures and options. Brokers know that they are profitable. They are the latest addition to our large stock market, but have already become famous. Many news channels are also telling about the benefits of futures and options. Futures and options trading India is a booming market.
Futures and options trading
India have to be understood fully before plunging into the markets. Once you understand the basics, it is easy to know what they essentially mean. As the name suggests, futures and options are transactions which happen in futures. There are only two parties to F&O derivatives. The buyer and the seller are the two parties. The transaction happens between these two. It can happen at any pre scheduled date and time and day. But there is an underlying difference to futures and options. First thing to understand is that an option means a contract. The contract is between the buyer and seller to buy and sell something. It can be anything- shares, commodities, food grain, securities, gold, silver etc. If it is a future contract, then the buyer has to buy it at the defined day and time and the seller has to sell it at that time only. A future is a mandatory transaction which has to be conducted on the date of maturity of the contract. There is no other option. In an option though, the buyer has an option to buy it or not. There may be times when the financial market is not in a good condition. At such times, the buyer can buy it at a later date, thus preventing him to take unnecessary risks.
F&O derivatives are lucrative, if done properly after a detailed study. But for this, it is essential that you know all the terms and definitions. Just buying and selling blindly may cause you heavy losses. Also, you can hire a broker if you want.
To prevent risk to a certain extent, it is essential to understand F&O derivatives.
