subject: Risk involved in Futures and Options trading India [print this page] Risk involved in Futures and Options trading India
The road to big money has a lot of pitfalls and losses on the way and treading carefully is the only solution. These are the words that anyone will tell you when you are going to initiate Futures and Options trading India. This investment instrument, though assures high returns also has a higher probability of losses owing to its volatile nature. One has to be patient as well as careful while working with Futures and Options. Research is also one of the keys to succeed in this market as it will help in bringing about a better understanding of the investments and thus help in minimizing losses and maximizing the returns and profits that one can earn. Here is some basic information about Futures and Options trading India.
For the Options traders, the amount of risk is low as here only the difference has to be paid and not the entire amount. What's more options contract can also leverage on the fact that the sellers and buyers are free to carry out transactions till the date of expiry of the contract. Only if you trade without having any opposite position in your hold, should the risk increase in an Options contract. Most of the seasoned and experienced players in the market are aware of this and thus keep substantial control over an opposite position so as to incur lower losses.
For Futures contracts however, the same does not stand true. A person dealing in Futures contracts shall be held liable for not only paying the difference amount but also the initial amount that was paid for forming the Futures contract. This makes the liability and risk facto unlimited in a Futures contract. Holding an opposite position is also possible in a Futures contract and this factor can help you minimize your losses though it depends ultimately on your research and the volume of investment.
It is advisable to only invest a minimum amount while going for Futures and Options trading India.
