Futures and Options (F&O), also known as derivative products are well-heard and trending in the stock market. The idea of stocks and trading is quite simple i.e. the value of stocks alters pertaining to factors like the market and economic dynamics. However, Futures & Options trading is quite different from these directly traded stocks in the market. Since these are derivatives, their value is indicative depending on the underlying security price. While one can find varied stock future tips, nifty option tips, etc. on the Internet, it’ll seem to be completely vague unless you don’t have a basic understanding of these trading options.


People often get confused and use the terms ‘Futures’ and ‘Options’ interchangeably. Well, that’s a common mistake that people tend to make, especially those tip-toeing into the industry for the first time. To make it simple, a Future is a trading contract that states the pre-determined price of a stock or asset and the specific date of its sale. On the other hand, an Option contract does state the pre-determined price and date of the sale; however, the investor has no obligation to fulfill it on the expiry date. It is merely an opportunity or right that the investor gets to make its final decision.


If you’re an avid trader, you must have been advised to follow a telegram channel for option trading or subscribe to expert nifty tips. Well, these are certainly important but before that, you need to understand the basics of the whole F&O trading.


General terms used in F&O Trading


Once you’ve decided to take a plunge and get started with trading in Futures and options, here are a few basic terms that you must know.


  • Underlying Security: Whenever you look for stock future tips or engage in any sort of option or futures trading, the term ‘underlying security’ is repeatedly used. It is the basic element of Futures and Options through which the value of these derivatives is acquired. Generally, this underlying security includes stocks, bonds, currency, indexes, and varied commodities.

  • Premium: Premium is the base price of the options contract that is payable to the seller by the interested buyer. This amount is quoted on the exchange as per the agreement. The premium is decided based on the inconstancy of the underlying security i.e. higher the volatility of the asset, the higher the premium.

  • Strike price: This is the price at which the options agreement holder agrees to buy or sell the underlying security at the time of contract maturity.

  • Expiry: As the name suggests, expiry is the last date beyond which the contract stands null and does not hold any value. Any clause mentioned in the Futures and Options contract must be exercised before this expiry date.


Futures: A brief overview


Futures are a derivative contract that makes the buyer and seller sign an official pact that states the pre-determined price and date of sale of an asset in advance. It is an agreement through which the value of the trade is fixed beforehand. Therefore, when the expiry date arrives, it is obligatory for the buyer and seller to comply with the agreement and trade at the pre-agreed price of the asset. This price is unchanged irrespective of any market changes, whatsoever.


There are two types of Futures i.e. Financial and Physical Futures. Financial futures include stock, currency, index, and interest rates futures whereas Physical futures cover commodity, metal, energy, and other types of futures.


Options: A brief overview


Options are derivatives similar to Futures except for the obligation to carry out the pre-determined trading between two parties. It is a contract that consists of all clauses related to price and exchange of underlying security. It is the most preferred and safest way to trade in stocks without actually owning them. In this, the buyer is not obligated to execute the contract; however, the seller is compelled to abide by the buyer's decision.

There are two types of Options i.e. Call and Put options. The Call options give the asset holder/buyer the right to buy a certain quantity of underlying security whereas the Put options give the right to sell a certain quantity of the asset.


F&O Trading Channels


F&O Trading is fundamentally a bet on the future prospect of underlying security assets such as stocks, currency, indexes, commodities, etc. It is a situation where two parties have an opposite opinion where one is willing to buy and the other is willing to sell them at a mutually agreed price in the future. The traders’ opinions are based on comprehensive market analysis and expert views such as stock future tips. This agreed price remains constant irrespective of the market scenario at the time of asset transfer.


This whole prediction and betting require an expert evaluation that is available through varied channels and F&O tip providers. Nifty Options Tips is one such credible Futures and Options tips provider company in India that offers genuine recommendations with 100% transparency. If you are one of those with limited time and knowledge of the market, Nifty Options Tips offers the best telegram channel for option trading. With expert tips and advice, you can trade in quality and make significant profits.

Futures & Options Trading: Know it all!Type your paragraph here.