Options trading is rapidly becoming more popular. Many traders are attracted to options trading as it can help them earn a significant profit in a relatively short time. Moreover, since these contracts offer leverage, traders do not need large capital to deploy some strategies.
Futures are financial contracts that obligate the buyer to purchase an underlying asset, such as a commodity, currency, or stock index, at a predetermined price and date in the future.
The financial markets provide a vast array of options to choose from when investing. One such option is option trading. As suggested by its name, it gives a trader the option to take a position against underlying assets.
Futures and options (F&O) refer to the market segment where derivatives based on underlying assets such as stocks, currency, or commodities are traded. These derivatives are usually of two types – futures and options.
An introduction of options on commodities futures is another feather in the history of the commodity derivatives market of India. For traders and investors in commodities in India, commodity options are a blessing in disguise. Although commodities options and stock options are similar, there are three key differences between both of them:
Energy derivatives encompassing crude oil and natural gas have been favourite amongst the commodity market segment because of their wide usage worldwide. Crude oil is considered the mother of the global financial market in general and the commodity market in particular, as this product contributes significantly to global economic development.
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