InvestorQ : Is the F&O market in India bigger than the cash market?
Kalyani Sundaram made post

Is the F&O market in India bigger than the cash market?

Answer
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2 years ago


The futures and options market in India is much bigger than the equity derivatives market in India. Derivatives in India consist of 2 key products in India; Futures and Options. While futures are linear products, options are not linear and they are more like asymmetric products where the payoffs to the buyer and the seller are very different. Derivatives means that they do not have any value of their own but their value is derived from an underlying asset. For example, options and futures on Reliance Industries will be linked to the stock price of Reliance Industries and will derive their value from the same. Futures and options trading constitutes an important part of the Indian equity markets and in terms of daily volumes F&O is nearly 90% of the volumes whereas index options alone is nearly 75% of the total volumes in the stock market on a daily basis. IT is therefore essential to understand the differences between futures and options and how equity futures and the options market form an integral part of the overall equity markets. In terms of daily stock futures the NSE is among the largest in the world and in terms of overall volumes in futures and options, the NSE ranks among the top 10 exchanges in the world.