Futures and options (F&O) are two types of derivatives.
What are Derivatives?
Financial derivatives are contracts whose value is based on the value of an underlying asset or group of assets.
Stocks, bonds, currencies, commodities, and market indexes are all common assets.
In the derivative market, one speculates on the future price of assets in order to profit.
Futures and options are two common derivatives. Both of them have contracts that can last up to three months.
One can opt-out of a contract at any point before it expires, or they can stay in it until it expires.
F&Os are equity options that are offered on the stock exchange. They are contracts that allow a buyer to purchase and a seller to sell a stock at a previously agreed-upon price at a future date and time.
F&O is used by investors to make different strategic bets.
F&O investing can be profitable for those who understand it, but it can also be financially dangerous for those who do not.
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