Futures and options (F&O) trading is a process in which investors buy and sell contracts for financial assets such as stocks, commodities, currencies, and indices. Futures contracts are agreements to buy or sell an asset at a fixed price at a future date, while options contracts give the holder the right, but not the obligation, to buy or sell an asset at a fixed price at or before a future date.
The process of F&O trading begins with an investor opening a trading account with a broker. Once the account is set up, the investor can place orders to buy or sell contracts on a stock exchange. Orders can be placed online or over the phone with the broker.
When an order is placed, it is matched with another order from a counterparty, and a trade is executed. The price of the contract is determined by supply and demand in the market.
Futures and options contracts have expiration dates, and when a contract expires, the investor must either take delivery of the underlying asset or enter into a new contract.
F&O trading can be used for a variety of purposes such as hedging, speculation, and investment. It is a risky activity and requires a thorough understanding of the underlying assets, the market conditions and the financial instruments used.