Following are the top 10 things to know about F&O trading before entering into trading, these data were analyzed from NSE India, these data will help to identify the most volatile & liquid scripts to trade!

 

Nifty Index futures have a leverage of 12.5 times for overnight positions. For intraday positions, you can get a leverage of around 31 times. Effectively this means that you can either lose or make 100% if the price moves by 8%. However, if you take on extra leverage, you can make or lose 100% if the price moves by 3.2%!

 

Stock futures on an average have a leverage of 8 times for overnight positions. For intraday positions, you can get a leverage of around 20 times. This effectively means that you can either lose or make 100% if the price moves by 12.5% for overnight positions and 5% for intraday positions.

 

Options are more complex than futures. Learn more about time decay and option greeks before you start trading aggressively.

 

Always square off your In the Money options positions before expiry. Otherwise you will pay a hefty sum as Securities Transaction tax which is unreasonably high.

 

Open interest analysis helps gauge the demand/supply of the underlying. It is extremely useful to trade options. Read more about it here.

 

Option Strategies are underutilized by retail traders. It is a more sane approach than directional trading.

 

Maximum positions by retail traders are in Nifty & Bank Nifty contracts.

 

Derivatives contract expiry in a month. However, currently Bank Nifty weekly contracts expire every week. Going forward, Nifty weekly contracts are expected too.

 

Futures has mark to market settlement whereas options buying doesn’t.

 

If you don’t square off your own position, the broker will square it off based on their margin policies.

Trading provides liquidity and as a consequence true pricing in the market.

 

Following are the key insights about Future & options trading data analyzed from NSE India!

Exact data regarding percentage of full time trading by people may not be available, but enough information is there on NSE web site to tell us that bulk of the volumes are generated by trading.

Total turnover in Futures and Options is shown as Rs. 3,73,908.05 Crores.

It is also seen that in Option trading, it is the Index Options which generate more volume, whereas in Futures trades, Stock Futures are about 4 times the Index Futures.

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Mahabaleshwar

Hi! I'm, a freelance blogger, trader and also an Engineer by profession. I write unique and research-driven content about options trading, Investing and blogging. The main purpose of my website is to teach "How to generate smart income?", you can stay in touch with twitter @tradepsycholog_