subject: Easy guide to Futures and Options trading in India [print this page] Easy guide to Futures and Options trading in India
The main reason for this difference in trading strategies is the fact that Options trading has lesser amount of risk involved in it when compared to futures trade contracts. There is a higher volatility in futures contracts and this is why those who are knew prefer keeping away from it until they are aware of the nuances of trading and earning money from the stock market.
Here are some basic details and ideas about Futures and Options trading for those who are new to this high risk higher return game!
In simplistic terms Futures & options are really easy to understand. For those of you who are unaware, F&O contracts are those contracts that are regulated by the exchange. In these contracts there is a certain commitment from both the buyer as well as the seller for a transaction or settlement to be carried out on a future date that is fixed today itself. This future date is also known as the expiry date of the contract.
Here are some basic details about futures contracts
In these contracts the buyer and seller agree on contractual terms about the sale of an asset. The date of the sale of the particular asset is determined today and it is also mentioned in the contract. No purchase or sale of that specific asset can be carried out before the date mentioned in the contract. Cash payment date and delivery date too are pre-determined in futures contract. These dates too are mentioned in the contract which is signed by both parties.
Here are some details for the options trading enthusiasts in the market of Futures and Options trading
These contracts are considered to be a step further from options contracts mainly because the selling party has obligation-free rights to sell the underlying asset or even buy the same from the market till the specified date as also in the period leading to the expiry date.
