InvestorQ : What is the best way to trade in futures and options in the market?
Shreya Karn made post

What is the best way to trade in futures and options in the market?

Answer
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2 years ago


Futures and options are traded in contracts of 1 month, 2 months and 3 months. All F&O contracts expire on the last Thursday of the month. If Thursday is a holiday then it expires on the previous day. Futures will trade at a futures price which is normally at a premium to the spot price due to the time value. There will only be one futures price for a stock for one contract. So a stock like Tata Motors will have 3 futures prices for the 3 monthly contracts. Like in Jan 2018, one can trade in Jan Futures, Feb futures and March futures of Tata Motors. Trading in options is slightly more complicated as you actually trade the premiums. So, there will be different strikes traded for the same stock for call options and for put options. So, in case of Tata Motors, the call options premium of 400 calls will be Rs.10 while these option prices will be progressively lower as your strikes go higher.