Futures & Options
What Are Futures & Options?
- A Futures contract is an agreement to buy or sell an underlying asset at a predetermined price on a specified future date
- An Options contract gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within or on a specified expiry date
Getting Started with F&O on Firstock
Risks in F&O Trading
- Market volatility can cause unexpected losses
- Liquidity issues affect order execution
- Leverage can amplify losses
- Options risks: Buying may lose entire premium; selling can incur large losses
- Margin shortfalls may lead to auto-square off
- Physical settlement obligations for ITM stock contracts at expiry
Lot Size Changes (Effective Nov 20, 2024)
Lot Size Changes (Effective Nov 20, 2024)
Expiry Rules
- Nifty 50: Weekly & monthly expiry (Tuesdays)
- Sensex: Weekly (Thursdays) & monthly expiry
- Other indices: Only monthly expiry
- ITM Options → Physically settled
- OTM Options → Expire worthless
Common Trading Limitations
- Strike Price Restrictions: Exchanges allow orders only at specific intervals (e.g., every 100 points)
- Market Order Restrictions: Some contracts only allow limit orders due to liquidity/risk concerns
Physical Settlement Policy
- ITM stock F&O: Requires actual delivery of shares or funds (T+2 settlement)
- Index F&O: Cash settled
Rollover & Ban Periods
- Rollover: Close expiring contract, open next series for same position
- Ban Period: Triggered when 80% of MWPL is breached; only square-off allowed, not fresh positions
Corporate Actions Impact
- Events like splits/dividends lead to strike price, lot size, and OI adjustments—automatically handled by exchanges
Visibility & Listing
- F&O contracts are listed only for SEBI-approved stocks and indices. Non-listed stocks may not have F&O availability.
Key Terms
- Open Interest (OI): Total number of unsettled contracts
- Rollover: Extension of position from one expiry to the next
- MWPL: Market-Wide Position Limit
FAQ
To activate the F&O (Futures & Options) segment with Firstock, you need to submit any one valid document as income or financial proof.
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You can provide any one of the following documents as income proof
- Bank Statement – Latest 6 months’ bank statement.
- Salary Slips – Latest 3 months’ salary slips for salaried individuals.
- ITR Acknowledgement – Acknowledgement of your latest Income Tax Return.
- Form 16 – Form 16 for the latest financial year.
- TDS Certificate – TDS certificate for the latest financial year.
- CDSL Holdings Statement – CDSL-approved statement showing your securities holdings.
Your F&O activation request is usually processed within 30 minutes during working hours. However, exchange approval may take up to 24 working hours.
You will receive a confirmation once your F&O activation request is processed
Your segment activation request may be rejected if the submitted documents or details do not meet the applicable exchange requirements. Common reasons include missing, invalid, unclear documents, or mismatched information.
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What you can do:
- Upload clear and legible documents.
- Submit valid income proof, such as a 6-month bank statement, salary slips, Form 16, or ITR acknowledgement.
- Ensure your personal and bank details match across all documents.
- Re-upload the corrected documents through your Firstock account.
An F&O contract enters a ban period when its open interest crosses 95% of the Market Wide Position Limit (MWPL).
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Key points:
- The ban helps control excessive positions and manage market risk.
- The ban is lifted when open interest falls below 80% of MWPL.
- During the ban period, fresh positions cannot be created, while existing positions can be squared off.
- You can check the current F&O ban list on the https://firstock.in/marginCalculator