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Options are derivatives, which means that their value is derived from some underlying security like stocks. Options trading is the practice of buying and selling options in the market. In this article, we will discuss about some suitable option positions while keeping in mind the market sentiment and the risk/reward outlook.

Over the counter (OTC) derivatives are financial instruments or securities traded directly between two parties instead of a stock exchange. Because no centralized exchange (for example, Bombay Stock Exchange) exists between the two parties involved, counterparty risks are higher. However, the buyer and the seller have more flexibility to customize their contracts without interference. Click here to read more about OTC derivatives and their advantages and disadvantages. 

Futures and Options are financial trading instruments known as derivatives. They are fundamentally different from other traditional investment tools like shares and stocks when it comes to their trading mechanism. The ‘last day trade’ in an F&O contract holds a lot of importance in derivatives trading.

Like any form of trade, trading in Derivatives involves various risks that can affect investors. If not managed properly, it can lead to severe financial loss, including bankruptcy. The risks stem from multiple factors that make up the trade in various Derivatives. 

Derivatives can be categorised into different types based on the risk and benefits associated with each type. These different types of derivatives present various opportunities to you to get to your financial goals as a trader.  

Trading in Options represents one of the more popular categories of derivatives in India. Such trade involves using market strategies that allow various investors to tailor their investments according to their requirements. Market strategies for Options trade are just as complex as the trade itself.