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it helps the traders to get higher returns with lesser investment. Also a trader doesn’t generally want delivery of the stock as they are only buying a stock for a short term basis. Call and put options are helpful to protect the traders from downside risk.
Futures and Options are called Derivatives. Derivatives are financial instruments that derive their value from either a stock of a company or any commodity or Gold etc…, based on the changes in their price values. Futures and Options are specifically called Exchange traded derivatives which means they can only be traded through an Exchange.
F&O allows the trader to use Hedging technique which gives increased exposure to the trader to make profit without worrying about the price fluctuations.
traders can derive profit as the trader is done on the future date, trader can reduce risk and increase profits using F$O
Futures: the deal happens now but the settlement happens later
if the trader doesn’t have money to buy a contract now but can bring it at the latter date
Options:
Call options are needed by the buyer to get the rights to buy the share without obligationPut options are needed by the buyer to get the rights to sell the share without obligation
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