Futures & options
What is Futures?
Also called: Futures contract
Hinglish mein padhein: Futures kya hota hai?
A futures contract is an agreement to buy or sell an asset at a set price on a future date. Both sides are obliged to settle.
Traders pay a margin, not the full value, so profits and losses are magnified. Positions are marked to market every day.
Stock futures in India are cash-settled and expire on the exchange's scheduled expiry day each month.
Related terms
- Options (call and put)An option gives the buyer the right, but not the obligation, to buy (call) or sell (put) at a strike price before expiry. The seller takes the obligation.
- MarginMargin is the money you must keep with your broker to take a position, especially in intraday and F&O trades where you control more than you pay.
- Lot size (F&O)F&O contracts trade in fixed lots. SEBI requires each contract's value to be at least ₹15 lakh at introduction.
- ExpiryExpiry is the last day an F&O contract trades. After that, open contracts are settled and cease to exist.