Introduction

Trading in futures and options (F&O) has become a popular way to diversify investments and hedge risks in the financial markets. With the right knowledge and strategy, anyone can start trading and leverage F&O to maximize returns. This guide will walk you through the fundamentals of business with futures and options, how to start trading, and essential strategies for success.

Understanding Futures and Options

What Are Futures?

A futures contract is a financial agreement to buy or sell an asset (stocks, commodities, or indices) at a predetermined price on a future date and to start future and option trading futures and options. Futures are standardized contracts traded on exchanges like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange).

Key Features of Futures Contracts:

• Obligatory Execution: Buyers and sellers must fulfill the contract on the expiry date.
• Margin Trading: Traders only pay a fraction of the total contract value as a margin.
• Leverage: Investors can take large positions with limited capital.

What Are Options?

Options give traders the right (but not the obligation) to buy or sell an asset at a specific price before or on the contract expiry date.

Types of Options:

1. Call Options – Gives the right to buy an asset at a fixed price.
2. Put Options – Gives the right to sell an asset at a fixed price.

Why Trade Futures and Options?

1. Hedging Against Market Risks: Investors use F&O to hedge risks in volatile markets.
2. High Leverage: Traders can control large positions with minimal capital.
3. Profit in Bull and Bear Markets: Options trading allows earning from both rising and falling markets.
4. Portfolio Diversification: F&O trading provides exposure to various asset classes.

How to Start Trading in Futures and Options

1. Open a Trading and Demat Account

To trade in F&O and how to start trading you need a Demat and trading account with a registered stockbroker.

Steps to Open an Account:

• Choose a SEBI-registered stockbroker (e.g., Zerodha, Upstox, Angel Broking).
• Submit KYC documents (PAN, Aadhaar, bank details, income proof).
• Complete account verification and receive login credentials.

2. Understand Market Fundamentals

Before trading, gain knowledge about:

• Stock Market Trends: Track NIFTY, SENSEX, and India VIX to understand volatility.
• Fundamental and Technical Analysis: Learn to analyze financial reports and price charts.
• Option Greeks (Delta, Gamma, Theta, Vega): These help in assessing option price movements.

3. Learn About Margin Requirements

Trading in F&O requires margin money, which varies based on contract size and market conditions. Stockbrokers provide margin calculators to help traders plan their positions.

4. Choose the Right Trading Strategy

Popular Futures Trading Strategies:

1. Trend Following Strategy – Buy futures in an uptrend, sell in a downtrend.
2. Spread Trading – Buy and sell futures contracts simultaneously to minimize risk.
3. Scalping – Profit from small price movements by making multiple trades.

Popular Options Trading Strategies:

1. Covered Call Strategy – Holding a stock while selling call options to earn premiums.
2. Straddle Strategy – Buying both a call and put option to profit from high volatility.
3. Iron Condor Strategy – Combining multiple options contracts to limit risk and enhance returns.

5. Start Trading with a Demo Account

Most stockbrokers provide paper trading accounts where beginners can practice trading without real money. This helps in understanding price movements, placing orders, and managing risk.

6. Monitor and Manage Risks

• Stop-Loss Orders: Protect against significant losses by setting stop-loss levels.
• Position Sizing: Avoid investing all capital in a single trade.
• News & Events: Track financial news, RBI policies, and corporate earnings reports.

Essential Tips for Successful F&O Trading

1. Start Small: Begin with a few contracts and increase exposure gradually.
2. Stay Updated: Follow market news, economic indicators, and stock trends.
3. Avoid Overtrading: Excessive trading can lead to high brokerage fees and losses.
4. Maintain a Trading Journal: Keep records of trades to analyze mistakes and improve strategies.
5. Use Hedging Techniques: Reduce risk by using protective puts and call options.

Conclusion

Trading in futures and options is a powerful way to maximize investment opportunities and manage risks. By understanding market trends, choosing the right strategies, and practicing risk management, traders can build a profitable trading career. If you’re new to F&O trading, start with a Demat account, practice with demo trades, and gradually scale up as you gain confidence.

With the right approach, trading in futures and options can be a lucrative business venture and a strong financial tool for long-term success.

By Adedapo Adesanya

The duo of Okitipupa Plc and Geo-Fluids Plc weakened the NASD Over-the-Counter (OTC) Securities Exchange by 0.75 per cent on Thursday, March 26.

This depleted  the market capitalisation by N14 billion to N1.915 trillion from the N1.929 trillion it ended a day earlier, and the NASD Unlisted Security Index (NSI) decreased by 14.40 points to 3,315.21 points from 3,340.14 points.

Okitipupa Plc went down by N28.50 during the trading day to N256.50 per share from Tuesday’s closing value of N285.00 per share, and Geo-Fluids Plc crashed by 5 Kobo to close at N2.65 per unit versus N2.70 per unit.

There was an increase of 78.22 per cent in the volume of securities transacted to 30,026 units from the 16,848 units transacted in the previous trading day, there was a 15.59 per cent growth in the value of transactions to N3.7 million from N3.2 million, and the number of deals completed by the market participants increased by 225.00 per cent to 13 deals from the four deals recorded a day earlier.

At the close of business, Impresit Bakolori Plc was the most traded stock by volume on a year-to-date basis with 533.9 million units worth N520.9 million, the second position was occupied by Industrial and General Insurance (IGI) Plc with 70.0 million units sold for N23.8 million, and the third position was taken by Geo Fluids Plc with the sale of 44.1 million units for N89.0 million.

Also, Impresit Bakolori Plc was the most traded stock by value on a year-to-date basis with a turnover of 533.9 million units worth N520.9 million, trailed by FrieslandCampina Wamco Nigeria Plc with the sale of 13.3 million units valued at N513.9 million, and Afriland Properties Plc with 17.6 million units sold for N360.1 million

By Adedapo Adesanya

The Naira depreciated against the United States Dollar by 0.27 per cent or N4.14 in the Nigerian Autonomous Foreign Exchange Market (NAFEM) segment on Wednesday, March 26.

Data showed that the exchange rate of the local currency against the greenback ended at fell to N1,537.80/$1 during the session compared with the previous day’s N1,533.66/$1.

But it closed flat against the Pound Sterling and the Euro in the official market during the session at N1,985.37/£1 and N1,659.12/€1.

In the black market, the Nigerian Naira gained N5 against the US Dollar yesterday to settle at N1,560/$1, in contrast to the preceding day’s value of N1,570/$1.

The Central Bank of Nigeria (CBN) has blamed bad actors like speculators and manipulators for the pressure facing the local currency in the last month after months of relative ease amid broader efforts by the apex bank to align the FX market with market fundamentals.

Meanwhile, the governor of the CBN, Mr Yemi Cardoso in his statement at the February 2025 Monetary Policy Committee (MPC) meeting, which was released on Tuesday on the apex bank’s website, stressed the bank’s role in safeguarding the market from practices that threaten price stability and investor confidence.

“We must maintain a heightened level of surveillance in our foreign exchange market and root out any bad actors and practices that threaten the smooth functioning of the market and stability of the exchange rate,” he said.

In the cryptocurrency market, sell-offs occurred after President Donald Trump threatened bigger import tariffs on the European Union (EU) and Canada if they worked together “to do economic harm” to the US.

However, comments from Federal Reserve Chairman, Mr Jerome Powell, indicate that the inflationary pressures resulting from tariffs could be transitory.

Ripple (XRP) fell by 3.4 per cent to $2.36, Solana (SOL) slumped by 3.2 per cent to $138.98, Ethereum (ETH) declined by 1.6 per cent to $2,027.89, and Cardano (ADA) slumped 1.3 per cent to $0.7401.

Further, Litecoin (LTC) shrank by 0.7 per cent to $94.00, Binance Coin (BNB) depreciated by 0.2 per cent to $630.24, and Bitcoin (BTC) tumbled by 0.1 per cent to $87,520.12, while Dogecoin (DOGE) gained 2.4 per cent to sell at $0.1976, with the US Dollar Tether (USDT) and the US Dollar Coin (USDC) trading flat at $1.00 apiece.