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Futures and Options Trading: A Beginner's Guide

24 Aug, 2021

Futures and Options Trading: A Beginner's Guide

In your every-day life, you must have been bombarded with several financial offers that promise to increase your wealth in a shorter span of time and no wonder every option seems temptful. But, the question is, will all these offers match your financial goals and expectations while bringing you a stress-free financial future?

While making your financial decisions, you will have to carefully consider every offer and make sure that it will prove to be beneficial for you. Sharepa - Best Discount Broker in India has the perfect solution for you in this blog!

Investing in trading can benefit you in numerous ways and if you select the right option under it, you can make the most out of your valuable money and attain all your financial goals. Investors prefer trading as their go-to strategy when it comes to making their financial decisions.

What is F&O trading?

F&O or Futures and Options Trading are one of the widely-used financial instruments by traders while trading in the stock market. They represent derivatives in the stock market. These derivatives are contracts which are known to derive their values from an underlying asset or commodity.

IPOs (Initial Public Offerings) are considered as one of the most chosen investment options by a lot of investors since they are highly beneficial and help in achieving rapid profit in a shorter period of time.

Futures contracts are regarding the buying and selling of an underlying asset at a fixed rate and at a specified period of time. Purchasing futures contracts are an assurance that you will pay the price of that underlying asset at the designated time. Selling a futures contract is an assurance that you will sell the concerned underlying asset to the buyer at a fixed price and time.

They are available on a wide range of commodities, currencies, interest rates, stocks, and other tradable assets. Also, they are immensely popular in the stock market, interest rates, and foreign exchange.

On the other hand, Options contract does not provide the buyer and the seller with the obligation, but the right to buy and sell the underlying asset at a specific price and date.

Here is are 4 Reasons Why F&O Trading Will Be A Financial Boon

Options contracts are of two types. They are:

1. Call options:

It provides you with the right to purchase an underlying asset at or before the expiration date. In the call options, the buyer has the right to buy the stock or stock indices at a particular price and at a particular date, but not the obligation. Herein, the obligation lies with the seller for which he gets paid with a Premium price.

2. Put options:

In a put option, the buyer has the right to sell the underlying asset at a specific price on or before the expiration date but the buyer is not obligated to do so. If you expect the stock prices to decrease, then it is advisable for you to go for the put option.

Future and Options trading will be your one-stop solution that can assure you the ideal financial future that you have been dreaming of for years!

They are the best trading strategy that you can use to protect your investments and at the same time maximize your returns as well.

Also read, 3 common mistakes to avoid while trading in Futures and Options

Now that you have known what Futures and Options trading are all about, it's time for you to make them your ultimate financial partner and live a prosperous financial life!

Begin your investment journey with Sharepa The Best Broker for Futures and Options in India

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