What is F&O (Futures and Options)?
Futures and options are financial tools that enable traders to speculate on the price movements of an underlying asset without owning it. In futures contracts, the buyer commits to purchasing the underlying asset at a predetermined price and date, while the seller is obligated to deliver it. Options contracts grant the buyer the right, but not the obligation, to buy or sell the underlying asset at a predetermined price and date. The seller must fulfill the contract if the buyer decides to exercise their option.
Trading in futures and options is intricate and involves notable risks. The value of these derivatives can be influenced by various factors such as market volatility, changes in interest rates, and fluctuations in currency exchange rates. Traders may encounter substantial losses if their positions move unfavorably.
Understanding the intricacies of derivatives requires a comprehensive grasp of the subject.