What is F&O - Futures and Options?

Options and futures are both financial products investors can use to make money or to hedge current investments. Both a future and an option allow an investor to buy an investment at a specific price by a specific future date. The price of the FnO contracts are derived from an underlying asset such as shares, indices, commodities, currency and more. These contracts are traded in a specific lot size.

Futures are contracts to buy/sell securities at a specific future date (expiry date) at a predefined price (decided while entering into the contract).

Options are rights, but not an obligation, to buy or sell a security at a future date (expiry date) at a pre-defined price (also known as strike price).

Also Read: Difference between Futures and Options