What are future and options in share market?

Answer 1

Well, in the Stock Market futures are about the stupidest thing you can do.

Having got that out of the way, futures and options are ways of buying stock (or anything else) in the future. A futures contract requires you to buy or sell the stock at the expiration date of the contract; an options contract only exercises if the option goes in the money. There are two kinds of options and futures, puts and calls; a put is in the money if the stock is selling for at least five cents below the "strike price" printed on the contract. A call is in the money if the stock is selling for at least five cents above the strike price.

The reason a futures contract is a bad thing to do with stocks is it requires the transaction take place no matter what. We shall say you bought a naked put on 100 shares of Acme with a strike price of $25. A naked option is one where you don't actually own the stock you're playing with. Now! If you were stupid enough to set this up as a futures contract, if Acme is selling for $50 on the expiration date, you need to pull five thousand dollars out of your brokerage account, buy 100 shares of Acme and turn it over to the put writer who will give you $2500 for it. If you had an option on it, under the same circumstances you'd just be out your premium because the option would expire unexercised.

Answer:Futures and options are collectively known as F&O, although they don't mean the same thing. A future is a contract that obligates the delivery of an underlying asset at a specified price on a specified date in the future, whereas option is a contract that gives the holder the right to buy or sell the underlying asset at a specified price during a pre-determined duration of time. F&O trading is popular amongst investors given its potential to earn them considerable profits. For assistance with f&o trading you can refer to GEPL, a reputed online trading broker who offers stock broking services in commodities & f&o.