Sharepa – Your Future in FNO Trading

Futures and Options (F&O) trading involves derivative contracts based on an asset’s future price, like stocks, indices, or commodities. While it holds potential for high returns, it’s a risky endeavor.

In F&O trading, you can choose between futures or options contracts. Futures entail an agreement to buy/sell an asset at a set price on a future date. Options give buyers the choice (but not the obligation) to buy/sell at a predetermined price on or before a certain date.

The underlying asset is what these contracts derive their value from. For example, trading a futures contract on the Nifty 50 index links it to the Nifty 50 index itself.

To enter F&O contracts, you’ll need to deposit a margin amount in advance, as mandated by Market Regulators

Consider the asset’s volatility when trading F&O contracts; higher volatility means increased risk.

While F&O trading offers profit opportunities, it’s vital to grasp the risks involved and only proceed if you’re comfortable and well-informed about the underlying asset.

Equity futures: These agreements involve purchasing or selling a specified number of shares (Market Lot) of a particular stock at a predetermined price on a future dated contract. Traders utilize them to manage risks or make speculative bets on a stock’s future price.

Index futures: These contracts revolve around buying or selling a set number of points tied to a stock index (e.g., Nifty 50, Bank Nifty, Sensex,) at a predetermined price on a future date. Traders use them to hedge risks or speculate on market trends.

Commodity futures: These contracts pertain to buying or selling a specific amount of commodities like gold, oil, or wheat at a predetermined price on a future date. Traders employ them to manage risks or make predictions about commodity prices.

Interest rate futures: These contracts involve buying or selling specific interest rates (e.g., three-month or six-month LIBOR) at a predetermined price on a future date. Traders use them to hedge against interest rate changes or speculate on their future direction.

Currency futures: These agreements relate to buying or selling particular currencies, such as the US dollar or the euro, at a predetermined price on a future date. Traders use them to hedge against currency exchange rate fluctuations or speculate on future currency trends.

It’s crucial to recognize that futures and options contracts are leveraged, enabling control of a substantial asset amount with a small investment. This magnifies both potential profits and losses, necessitating a thorough understanding of associated risks before engaging in trading.

Margin in F&O trading is like a down payment you give to your broker when you want to start trading futures or options. It’s a bit like making a small payment to buy something much more valuable. In Options Buying trader pays the Premium which is the maximum possible loss that can happen that perticular trade.

The amount you have to pay as margin is decided by Stock Exchanges. It varies depending on what you want to trade. For instance, if you’re trading in stocks futre, you might need to pay 20% of the stock’s value as margin.

Now, here’s the important part: If the price of the thing you’re trading goes in the wrong direction, you might have to give more money to your broker to keep your trade going. If you can’t add more money, your trade will close, and you could lose some money.

So, before you start trading, make sure you understand how margin works and the risks involved. It’s like knowing the rules of a game before you play.

Powerful Leverage: F&O contracts are like using a magic magnifier. They let you control a lot of valuable stuff without putting in much of your own money. This can make your wins huge, but if things go wrong, your losses can be equally enormous.

Wild Price Swings: Imagine the price of what you’re trading as a rollercoaster. Sometimes it goes up super fast, and sometimes it drops really quick. These fast changes can lead to losses.

Tricky Stuff: F&O trading is like a complex puzzle, especially for beginners. It’s like trying to solve a tough riddle.

Market Uncertainty: Think of the market as a big, unpredictable game. Sometimes, it doesn’t play out in your favor, and you might lose money.

Hard to Find Buyers: Selling what you’ve got can be tough too. It’s like trying to sell a rare collectible – not everyone may want it, and finding a buyer at a good price can be tricky. It mostly happens in far money illiquid contracts.

Broker Risks: Your broker, the one you are using to execute your trades, may not be following the compliances properly, which may result in broker default. It is advisable to trade with a reliable broker.

So, before diving into F&O trading, make sure you truly understand these facts. It’s like getting to know all the rules of a new game before you start playing.

Our app provides real-time updates, ensuring you receive instant and accurate information on your F&O holdings. You can access a comprehensive overview of your portfolio, including detailed contract information, quantities, and current market values. This enables you to have a clear understanding of your F&O investments at a glance.

Yes, we have a mobile app for Android and iOS users. To download on Android devices, click here. To download on iOS devices,  click here.

You can call us on 022-61778675 / 78 or drop us an email at helpdesk@sharepa.net.in