Futures and Options
Do systematic trading to build wealth over time.
What are derivatives?
Futures and Options a.k.a Derivatives, are financial contracts between two parties, one of whom is the buyer and other is the seller. There is an underlying asset for each derivative which is either a stock or an index.
Futures and options are themselves traded in the stock market. Price of any derivative changes with any change in the price of underlying stock or index. Since derivatives are contracts, they come with an expiry date.
In India, not all indices and stocks listed on a stock exchange are allowed to trade in the derivative segment. They are a select few and are chosen based on certain criteria given by the stock exchange.
How to trade in derivatives?
Want to trade more with less capital and take greater risks? Open a trading and a demat account.
Futures and options are traded in lots. To buy one lot of futures, you need to have the marginal money in your trading account. This marginal amount is only around 25% to 30% of transaction value.
To buy two lots of the same futures, you need to have twice the margin amount in your trading account. You can also go short in the future. This allows you to make money when the markets are falling.
Want to buy options? All you need to pay is a premium. In case you want to sell a fresh lot of options, which is also called writing an option, you need to have the marginal amount.
Futures and options are also called derivatives. Profit (or loss) in the derivatives segment is settled daily on a mark to market (MTM) basis.
Your MTM profit or (loss) reflects into your trading account at the end of day on a daily basis. If you make profit on a day, profit will be credited in your trading account. If you make loss, loss will be debited from your trading account. If you don’t have sufficient balance, you need to transfer remaining funds to your trading account on the same day.
Why should you invest in Derivatives?
and command a major share in daily trade volumes in the market.
Leverage
Trading in derivatives requires margin money. This margin money is much lesser than the cost of purchase of the actual number of shares of the same underlying asset. Thus you can trade large volumes in derivatives when compared to equity with the same amount of investment.
Liquidity
Futures markets are highly liquid thanks to the large number of trades happening everyday. You can practically buy or sell huge quantities of futures without affecting their prices.
Short Selling
In India, short selling in stocks is not allowed. At the most, it can only be done in intraday trades in equity. Though you can short sell futures or options depending upon your trading strategy. This single feature can be the most useful one in devising short term trading strategies and exploiting fluctuations in the market.
Hedging
You can also hedge your investment in stocks by use of derivatives to reduce the down side risk.
What do we offer?
Relationship Manager
Algates Financial as an Authorised Person of Cholamandalam Securities brings to you a host of services and benefits.
Instruments Available
Once you open an account with us, we allow you to trade in equity, preferred shares, debentures, bonds and mutual funds.
Ease in Trading
We cater to all types of customers, whether they are investors or traders. We offer customised brokerage plans which suit your requirements. You can log into your account on your own device and trade from anywhere.
Dial-N-Trade
We also offer a free of cost Dial-N-Trade facility. You can call your dedicated customer service desk anytime during the market hours to place your order.
Research
Cholamandalam Securities has a full-fledged research team which does ongoing fundamental and technical research on stocks, sectors and markets. Their top picks, morning calls and research reports are to help you make an informed decision.5
Investor Education
We at Algates Financial believe in sharing knowledge. If you are a beginner in stock market, we bring to you our online and offline workshops to help you understand the basics of stock market.
Connect with our Growth Experts now for a valuable consultation.