Futures and Options (F&O) are advanced financial instruments used in the stock market for trading, hedging, and speculation. A futures contract is an agreement to buy or sell an asset at a fixed price on a future date, and both parties are obligated to fulfill the contract. Futures are traded in lot sizes and require margin, offering high profit potential but also unlimited risk.
Options, on the other hand, give the buyer the right but not the obligation to buy or sell an asset at a specific price before expiry. There are two types: Call (used when expecting price to rise) and Put (used when expecting price to fall). Option buyers face limited risk (premium paid), while sellers may face higher risk. F&O trading requires proper knowledge, strategy, and strong risk management.
