Futures and Options are also known as risky tradings. This tradings are not reliable as it influence by global conditions, news, political conditions, weather conditions etc.
Futures :-
Futures is nothing but the future price of present stock price. Futures may be greater or smaller than present price depends on the future conditions. It is a virtual contract between traders and stocks are traded in lots (Nifty future have 75 shares in one lot).
E.g -
Suppose present stock price of SBI =250 then its future value for that month may be SBI Futures = 260
To purchase a 1 lot of SBI Future you need to spend = 260 *
It consists of three month
1. Near month (present month)
2. Next month
3. Far month
Every month expires on last thursday of that month . Suppose if you trading in near month i.e take e.g. December, then next month will be January and far month will be February.
Options :-
Options is nothing but the virtual contract between traders. Options having same concept of three months, lots, expiry as Futures but trading is different from Futures.
Options consists of 1. Call option :-
It is traded when market is bullish (increasing trend).
E.g.
Suppose i want to trade in call option in Century textile ( stock value = 766). I have forecast that it will move towards 880, so i will purchase 880 call but how much amount should i need to pay-
Century call 880 = premium * lot size
Where premium is the extra price paid in future i.e. it is set by super computer and it is 0.90 Rs. and its movement depend on movement of actual stock price.
Lot size of Century = 1100
Call 880= 0.90 * 1100 = 990 Rs.
2. Put option :-
It is traded when market is bearish (decreasing trend). Other parameters are same as call option.
E.g.
Suppose i forecast BEL will move towards 1360 where stock value of BEL = 1440
Put 1440 = premium * lot size
= 3 * 450 = 1350 Rs.
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