BSE, NSE, MCX Published on Tuesday, December 30, 2014 by Chittorgarh. We can help you find the right broker for your trading needs. Security bank forex traders this article I will share the information about how to trade Equity Futures and Options in few easy steps. They are special contracts whose value derives from an underlying security.
In case the price movement is adverse, trader incurs losses. O segment accounts for most trading across stock exchanges in India. They are the most popular trading instruments worldwide. This gives opportunity to trade more with little cash.
Profit or losses are calculated every day until trader sells the contract or it expires. Margin money is calculated every day. O contract and recover the money. Which means if trader do not sell until a pre-decided expiry date, the contract is expired and profit or loss is shared with you by the broker. NIFTY Futures are among the most traded future contracts in India.
However, the risk profile of your transactions goes up. All futures transactions are cash settled. Contract positions are hold by the exchanges until they expire. O positions are carrying forward to next day and can be continued till the expiry of the respective contract and squared off any time during the contract life. This is different from ‘Margin Trading’ where trader has to close the position the same day.
O are available for 6 indices. CNX Nifty Index, CNX IT index, Bank Nifty Index and Nifty Midcap 50 index. Capital Market segment of the Exchange. O trading in 135 securities stipulated by the SEBI. The stock exchange defines the characteristics of the futures contract such as the underlying security, market lot, and the maturity date of the contract.
O contracts of individual companies are not available for all the companies listed in stock exchanges. Only those stocks, which meet the criteria on liquidity and volume, have been considered for futures trading. O contracts can be traded at the exchange. What does ‘Square off’ means in future trading? Square off’ means selling a future position.
The order place to sell square off an open future position is called cover order. What are different types are settlements for Futures? The next question and an example in the later part of this article will explain you MTM process in detail. O trading and very little difficult to understand for conventional stock market investors who buy and sell shares for long term.