How to trade in futures and options

Futures trading

In futures trading, you can buy and sell the share of the company on NSE (National Stock Exchange). Only NSE offers the futures and options trading at NSE (National Stock Exchange) platform.

Futures trading is also called a futures contract. Futures contract offers to trade in Stocks and Indices. In futures trading, you have to buy or sell the share of a particular company in a lot size. There is a pre-defined lot size for every contract of listed companies whose shares are traded on the stock exchange. Every contract has its lot size which means lot size differs for every company ends the contract on whose share you want to trade futures contract having unlimited risk or high risk there is no limit for profit and no limit for loss in the

The requirement of capital is very high in a Futures contract. You can trade in the nifty and bank nifty futures contract also that is called index futures contract trading. Index futures trading has high volatility. Hence it is also riskier to trade but good research and intense study lower the risk of trading in index futures. Futures contracts have an expiry period. Every futures contract expires on the last Thursday of the month. We have to square off our position before the expiry.

Buying position in futures contract

If our research and study show that the share market can go up then we have to buy or create a long position. There is a requirement for margin level according to mark to mark daily position.

Selling position in futures contract

If our research and study show that the share market can go down then we have to sell or create a short position. There is a requirement for margin level according to mark to mark daily position.

Options trading

In options trading, we can buy and sell the options contract of the listed companies on the share market. It means on NSE (National Stock Exchange) because only NSE(National Stock Exchange) offers future and options trading in India. BSE (Bombay Stock exchange does not offer futures and options trading ). Options trading has very low risk, limited loss, and unlimited profit.

In options trading, the capital requirement is also minimum. You can trade with minimum capital. Your loss is limited in options trading means our loss is limited to only buying or selling value but profit is unlimited. There is no limit to earning profit in a single options contract.

There are two types of options trading one is Call options and second is put options.

Call option:

In the call options, we can buy the call option or sell the call options of index and stocks of the listed company of the share market. Capital requirement is very low to buy the call options of stock and index contracts. There is also a lot size of call options to buy or sell and it differs for every options contract of the companies and index. The call options also have an expiry period for the contract. Every call and put contract of the options expires on Thursday of every week and the last Thursday of every month which means there are two expiry periods offered by the NSE(National Stock Exchange).

Buying call options

If our research and study show that the share market can go up or move forward then we have to buy or create a long position in the options contract. There is no requirement for margin level according to mark to mark daily position. Because we have paid full value at the time of buying or selling the options contract. In options buying, there is different strike prices call option. We have to select the strike price level according to volatility.

Selling call options

If our research and study show that the share market can go down or move down then we have to sell or create a short position in the options contract. There is no requirement for margin level according to mark to mark daily position. Because we have paid full value at the time of buying or selling the options contract. In the options selling there are different strike prices of put option like call options. We have to select the strike price level according to volatility. Capital requirement is high in call option selling compared to buying call option contract.

Put options

In the put options, we can buy the put option or sell the put options of index and stocks of the listed company of the share market. Capital requirement is very low to buy the put options of stock and index contract. There is also a lot size of put options to buy or sell and it differs for every options contract of the companies and index. The put options also have an expiry period for the contract. Every call and put contract of the options expires on Thursday of every week and the last Thursday of every month which means there are two option of expiry period offered by the NSE (National Stock Exchange).

Buying put options

If our research and study show that the share market can go down or move down then we have to buy put options or create a short position in the options contract. There is no requirement for margin level according to mark to mark daily position. Because we have paid full value at the time of buying or selling the options contract. In the put options buying there are different strike prices put option, we have to select the strike price level according to volatility.

Selling put options

If our research and study show that the share market can go up or move forward then we have to sell or create a long position in the options contract. There is no requirement for margin level according to mark to mark daily position. Because we have paid full value at the time of buying or selling the options contract. In the put options selling, there are different strike prices of put options like call options, we have to select the strike price level according to volatility. Capital requirement is high in put option selling compared to buying put option contract.