InvestorQ : How to trade futures and options in the Indian derivative markets?
Niraja Mehta made post

How to trade futures and options in the Indian derivative markets?

Answer
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Mahil Khan answered.
1 year ago


Futures and options are predominantly traded on the NSE and the BSE. The F&O volumes on the NSE are substantially more than on the BSE. While futures are a right and an obligation on a stock or an index, the option is a right without an obligation on a stock or the index. The beauty of futures & options is that they are two-directional and can be traded on the long side as well as the short side. Let us focus on the options trading part in the Indian context.

In India all options and futures are necessarily cash settled. That means; there is nothing like delivery against futures and options. All profits and losses will be adjusted in cash and either credited or debited to their trading accounts. Of course, the exchange is now moving stock futures and options towards delivery settlement but that is more likely to impact the cost of STT on expiry date rather than anything else. But how do you go about trading options in India?

In case you want to trade in options and futures in India, you need to start off with opening a trading account with your broker. You can trade futures and options using your existing equity trading account. Some additional documentation is required in case of F&O trading like income proof, tax returns etc. This is to ensure that you understand the risk of futures and options and also have the financial capacity to take the required losses.