Futures and Options are basically risk management / hedging instruments to help us counter the positions which we take in cash segment. These positions will be squared off in say 30 days or so. i.e. very good in positional trading.
We pay a premium to the Future/option seller. They both are presently cash settled. They both operate in MTM mode wherein daily increase/decrease can be seen in the bank account. They are traded in lotsizes.

3 Comments
  1. Naresh 5 years ago

    Hi,
    I don’t understand your question, could you please explain what you mean?

  2. Author
    S. Karthik Sivaraman 5 years ago

    Hi Naresh, Thank you for reviewing my work. since the space was less could not accomodate full question.

    Lot size means how much will it constitute. For e.g. say maruti share price is around Rs. 7500 but in F & O Segment it will have to be traded in lot size. So, i did not know whether i should pay Rs. 750000 for a 100 lot size or something less than that. If i have to pay something less than that means margin money, how i have to maintain say 10% of Rs. 750000 for 100 shares? that was the confusion.

  3. Naresh 5 years ago

    Hi,
    Your margin amount will be locked by the broker so, only after the expiry or square off of your contract the margin amount will be release.

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