Futures and option are known as derivative instruments. It means the value of futures and options is derived from an underlying asset or instrument. Derivatives are the most important innovation of the financial market which has changed the whole way of operation of stock, commodity and currency market. Derivatives are essential for the financial market because they hedge the risk and offer the opportunity to earn profit from the incongruity in the market.
Nowadays the popularity of futures and options trading is increasing. Futures and options trading has lots of advantage. In this article, we are going to tell you why you should trade in futures and options
The margin money required for the future and option trading is lower than stocks so with a small amount you can get a higher trading exposure. And can take the advantage of the anticipated market moments.
You can also use derivative trading to safeguard yourself against the potential losses by hedging your positions. For hedging, you can buy in the cash segment and sell in the derivative segment or you can also do vice versa.
Index futures and stock options allow the investors to hedge the portfolio or open positions in the market. Options contracts allow you to gain more profit and limit the downside risk.
You can choose between conservative and high-risk strategies in the derivative trading. When there is more risk more gain so according to your risk-taking capabilities you can decide which strategy you want to follow. T
hese strategies are based on the expected rise and fall of the stock or index price. If you are new to share market and do not have any idea about the f&o strategies, you can take the services of some best f&o tips provider who can provide you Nse f&o tips on a regular basis.
In the derivative market, you can make the profit irrespective of market moving up or down or sidewise.
Though derivative trading can give you huge profit in a short period of time but it is not that much easy for the newbies. So it is always better to take the services of Intraday stock future tips so that you can grow your money at a faster pace. Usually, f&o tips providers give option trading tips and intraday future tips which can make trading more profitable