Futures & Options
What Are Futures & Options?
- Futures: Contracts obligating buyer/seller to transact at a set price on a specific future date.
- Options: Give the buyer the right (not obligation) to buy/sell at a fixed price; sellers must fulfill the contract if exercised.
Getting Started with F&O on Firstock
- Open a Firstock Trading & Demat Account
- Activate F&O Segment
- Submit income proof (ITR, salary slip, etc.)
- Accept risk disclosures
- Login & Trade
- Search F&O contracts, fund your account, place orders
- Monitor positions and square off before expiry if needed
F&O Activation Steps
- Go to: My Profile > Segments > Enable F&O
- Submit income documents and accept disclosures
- Approval time: 24–48 hours
Option Chain & Market Insights
- View Option Chain by searching for a stock/index and selecting “Option Chain”
- Get data on:
- Open Interest (OI)
- Put-Call Ratios (PCR)
- Implied Volatility (IV)
- Support & Resistance zones
Risks in F&O Trading
- Market volatility can cause unexpected losses
- Liquidity issues affect order execution
- Leverage can amplify losses
- Options risks: Buying may lose entire premium; selling can incur large losses
- Margin shortfalls may lead to auto-square off
- Physical settlement obligations for ITM stock contracts at expiry
Lot Size Changes (Effective Nov 20, 2024)
Lot Size Changes (Effective Nov 20, 2024)
Expiry Rules
- Nifty 50: Weekly & monthly expiry (Thursdays)
- Sensex: Weekly (Tuesdays) & monthly expiry
- Other indices: Only monthly expiry
- ITM Options → Physically settled
- OTM Options → Expire worthless
Common Trading Limitations
- Strike Price Restrictions: Exchanges allow orders only at specific intervals (e.g., every 100 points)
- Market Order Restrictions: Some contracts only allow limit orders due to liquidity/risk concerns
Physical Settlement Policy
- ITM stock F&O: Requires actual delivery of shares or funds (T+2 settlement)
- Index F&O: Cash settled
Rollover & Ban Periods
- Rollover: Close expiring contract, open next series for same position
- Ban Period: Triggered when 80% of MWPL is breached; only square-off allowed, not fresh positions
Corporate Actions Impact
- Events like splits/dividends lead to strike price, lot size, and OI adjustments—automatically handled by exchanges
Visibility & Listing
- F&O contracts are listed only for SEBI-approved stocks and indices. Non-listed stocks may not have F&O availability.
Key Terms
- Open Interest (OI): Total number of unsettled contracts
- Rollover: Extension of position from one expiry to the next
- MWPL: Market-Wide Position Limit
