Stock markets give investors a plethora of opportunities to trade in assets. Whether you are a short-term or long-term investor, you can find a range of ways to trade and invest to suit your personal financial goals. There are several ways to invest and instruments like mutual funds, IPOs, equity, bonds, NCDs and derivatives are the main instruments in which you can try your fortune with. Futures and options stocks contracts fall in the purview of derivatives. To trade and invest with futures and options, you have to grasp some fundamental concepts, and then you can execute trades online to make money.
Futures and options derive values from underlying assets that they represent. Therefore, you can have futures and options stocks contracts, futures and options commodities contracts, and so forth. Although futures and options deal with stocks, you do not need to open a demat account when executing such contracts. All you need is a good online brokerage account. As the management of risk is one of the major considerations while engaging in the securities markets, you should know that time is of the essence where risk is concerned. Time is seen as a risk as prices fluctuate with time.
Futures and options are contracts through which investors agree to trade (purchase or sell) securities, at a fixed future date. A futures contract gives the investor the right to purchase or sell shares by a date of expiry of a contract. Here, whether prices fall or rise, the trade has to be executed. In an options contract, the investor has the right to execute a transaction by a certain date, but is under no obligation to carry out the trade (in case price fluctuations occur and investors wish to pull back, cutting losses).
The first thing you do if you want to trade in futures and options online is to note that these derivatives are not applicable to all securities. Hence, you can get futures and options contracts only in securities included on the futures and options stock list. On the F & O stock list, there are 175 securities listed and these are stipulated by SEBI - the Securities and Exchange Board of India. Are you considering ditching futures and options and going in for any upcoming IPO with all this new information to digest? Don’t make decisions before you know how you can make money online with F & O trading.
Here are some hints as to how you can make money with futures and options stocks contracts online:
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