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Advantages Of Trading Futures & Options Over Stocks

By Lala , in News , at July 17, 2022 Tags: ,

Are you considering investing in the Stock Market but are unsure of your decisions? Yes, Futures & Options are considered riskier than Equities, but if you know the hacks well, you can gain profits and benefits from Future and Option Trading

Meaning

Derivatives Trading is the buying or selling of Futures or Options Contracts. Future Contracts are agreements to buy or sell an asset at a future date, while Options are the right, but not the obligation, to buy or sell Future Contracts. These Derivatives can be used to hedge against risk, speculate on price movements, or lock in future prices.

It is a complex and risky investment strategy, so it is essential to understand the risks before entering any trades. Anyone considering Futures & Options should consult a financial advisor to ensure it is right for them.

What is Stock Market Trading?

Stock Markets are where stocks are traded between investors. It is where investors buy stocks when they believe the company will do well in the future and sell them when they do poorly. The stock price depends on demand and supply mode. If more people want to buy a stock than sell, the price goes up. The price goes down if more people want to sell a stock than buy.

Most trading is done by professional investors, like Hedge Funds, but anyone can buy or sell stocks.

Advantages

Future Option Trading offers numerous advantages. These contracts can be used to hedge against risk. For example, a farmer worried about the future price of corn can purchase corn Future, which allows him to sell his corn at a set price regardless of market conditions. This hedging can help farmers to avoid losses if prices drop unexpectedly.

Besides, Futures and Options Contracts are often more liquid, meaning they can be sold or bought more easily. This is because there is usually a greater number of Futures and Options Contracts available for trading than stocks. As a result, such trading can provide greater flexibility and opportunity.

ICICI Securities Ltd. (I-Sec). The registered office of I-Sec is at ICICI Securities Ltd. – ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400 025, India, Tel No: 022 – 6807 7100. I-Sec is a Member of the National Stock Exchange of India Ltd (Member Code:07730), BSE Ltd (Member Code:103), and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and has SEBI registration no. INZ000183631. Name of the Compliance Officer (broking): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purposes and may not be used or considered as an offer document or solicitation of an offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers about whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purposes.

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