Futures and Options (F&O) are financial derivatives that allow traders to speculate on the price movements of an underlying asset without actually owning it. Futures and options are contracts signed by two parties for trading a stock asset at a predetermined price on a later date. F&O stands for Futures and Options, which represent derivatives of the stock market.

Futures and Options are two derivative instruments where traders buy or sell an underlying asset at a pre-determined price. The trader makes a profit if the price rises. In case the trader has a buy position, and if he has a sell position, a fall in price is beneficial for him.

Types of F&O include:

• Futures: Futures are contracts that obligate the buyer to purchase an underlying asset at a predetermined price and date in the future. The seller is obligated to sell the asset at the agreed-upon price and date.
• Options: Options are contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price and date in the future. The seller is obligated to sell or buy the asset at the agreed-upon price and date if the buyer chooses to exercise the option.

F&O trading is different from equity trading in that it allows traders to speculate on the price movements of an underlying asset without actually owning it. Trading in F&O requires traders to define their loss and profit trade-off for each trade and to keep a constant eye on the costs they are incurring.