FUTURES & OPTIONS: No money?

FUTURES: This is an agreement between the seller and buyer. The seller will not be having the commodity with him.

The one who buys will not get the commodity. The one who made profit gets cash and the one who lost, of course, pays up.

In all online trading there is provision for F&O trading division. In cash market you can call for shares according to your pocket strength.

In Futures that is not the case. This is called as ‘Lot’ here. One lot is equal to 100 shares (this lot depends on the share value in the open market and differs from share to share, for example - One lot of Infosys means 100 shares.

You have to buy according to the ‘Lot’ system. In case the Infosys share value were to come down in ‘Future’ you can sell it off.

Suppose the current market price of one Infosys share is Rs 2,600. If you want to buy 100 Infosys shares you will have to shell out Rs 2,60,000.

But in case of ‘Future’ you have to pay only 10 to 12 percent of the market price. That means if you pay Rs 26,000 the 100 Infosys share lot is yours.