Can anybody explain in detail the concept of Futures and Options, how it works, how and who fixes the Strike and Spot prices.
How can a person deal in F & O, what are the consequences and earnings. How risky it is? Thanks in anticipation.
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Futures & options
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Futures : gives you an option to buy more shares with a given amount. You have to pay only 25-30% of the total value of the purchase.
Say: you buy jetair 1000 shares in cash @ 295 , you have to have 2.95Lakhs.
In case you use futures, you may buy it if you have 60,000 in your account.
Futures are settlted on day to day basis depending on the closing price of stock.
So you have to ensure that you have adequate margin every day.
It's very risky as the profit/losses could be unlimited.
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