Options7 min read
Options trading basics: what a call and a put actually are
A call is the right to buy, a put is the right to sell, and a premium is what that right costs. Here is what each side of an option contract is signing up for.
Options and futures
Futurestay bhav par aage ki tareekh ka sauda
A contract to buy or sell an asset such as Nifty or SBI shares at a fixed price on a future date, traded in lots with margin.
A futures contract is an agreement to buy or sell an underlying asset, like Nifty or SBI shares, at an agreed price on a fixed expiry date. Both sides are obligated; unlike an option, there is no premium and no right to walk away. Futures trade in lots, and you post a margin that is a fraction of the contract value, which creates leverage. Suppose SBI futures with a lot of 750 shares trade at ₹805; the contract is worth about ₹6,03,750, and the margin might be around ₹1,00,000 at the time of writing. A ₹10 move in SBI changes your account by ₹7,500, in either direction. Positions are marked to market every day, so losses are debited daily and a margin call can follow. Futures suit hedging and experienced directional trading; they are unforgiving for beginners because losses are unlimited and fast.
Related terms
Lessons that use this term
Options8 min read
Lot size, expiry and margin: the three things every F&O beginner gets wrong
One Nifty lot is not one unit. Expiry is not just a date. Margin is not the price. Get these three straight before your first F&O order.