Futures and Options (F&O) are financial derivatives that derive their value from an underlying asset, such as stocks, commodities, currencies, or indices. These instruments are used for hedging, speculation, and arbitrage purposes, providing investors with various strategies to manage risk and enhance returns.
A futures contract is a standardized agreement to buy or sell the underlying asset at a predetermined price at a specified future date. It obligates the buyer to purchase, and the seller to sell, the asset at the agreed-upon price, regardless of the current market price at the contract’s expiration.
An options contract gives the holder the right, but not the obligation, to buy or sell the underlying asset at a predetermined price before or at the contract’s expiration date. There are two types of options: call options (which give the right to buy) and put options (which give the right to sell).
Intraday trading in the F&O market involves buying and selling futures and options contracts within the same trading day. This strategy aims to capitalize on short-term price movements.
Options provide versatile trading strategies due to their unique characteristics. They can be used for hedging, income generation, or speculation.
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