Course Overview
3h 14m | 22 Videos | 72903 Views | 
Intermediate About Cracking Futures and Options Training Course
Futures & Options (F&O) is a popular phrase used in investment journals, TV channels, websites, and general conversation nowadays. But a large part of the public is unaware of the concept. Let’s see what F&O is all about.
To begin with, let’s first confirm what we have already known i.e. you can buy and sell shares on an exchange as and when you feel like. The prices of stocks vary each day, in fact, every minute. You buy a share hoping that its price will appreciate in the future, and sell it when you want to book profits and exit.
This is also known as the “spot” or “cash” market. It means that when you say “I’ll buy 50 shares of XYZ Company at 160 each,” someone will sell the shares to you on the exchange at that price and you’ll get them on the “spot” (well, technically you’ll get the physical delivery after a couple of days but that’s the administrative lag). You have to pay the money on “spot” i.e. ₹8,000 immediately.
Futures
A Future is a derivatives contract where two parties agree to sell and buy something to each other on a future date. It means that the delivery isn’t immediate but at a much later date. Payment too is made on that date. Such an agreement is known as a “future contract”.
Options
As already said, Futures are contracts that the buyer and seller have to honor irrespective of the stock price on the given date. They are both obliged to square off the deal.
Now, those dealing in Futures are smart enough. They want to pocket the profits, and at the same time, reduce their losses. So therein comes the “Option” concept, another derivates concept, which is slightly different from Futures. The buyer of an Option has the “right” but no “obligation” to execute the contract. What does that mean? Say, you expect shares of XYZ Company to go up in three months’ time but you’re not sure. So instead of buying a Future, you buy a “Call” option, which gives the “right to buy” on a later date. If the contract is favorable to you on that date (meaning the spot price of XYZ is higher), you purchase the share and square it off, and take the profits. If your Call price is higher than the spot price, you may “ditch” the contract and not execute it, which means you suffer no losses.
But the person selling the shares to you has to be really stupid. Since the price is higher, he’s obliged to sell it and suffer a loss. But you don’t execute the contract because you make no profits. So what does the seller do? He charges you a “premium” which is the amount you pay for buying the Option. It could be quite cheap, maybe ₹20 per share. But that’s the money the seller takes against the trouble of keeping the shares, in case you don’t execute the Option. If you do, the seller still retains the margin, but pays the mark-to-market loss.
How do the two compare?
While both Futures and Options are similar to each other, they have some key differences between them. The Futures market is considered the nucleus of capitalism. It provides the base for wholesale, and subsequently, the retail market for commodities that include petrol, steel, cement etc. to items for daily consumption like sugar, tea, rice, pulses, and others.
Just like a Futures contract, an Option is a security which is subject to a binding agreement. The main difference between a Futures and Option contract is that the latter doesn’t oblige you to honor it, but you have to follow rules of the contract.
Besides, as already said, Options are derivative instruments that get their value not from the own latent value, but from the underlying security at a given point of time. For instance, Options on the shares of XYZ Company, will be directly influenced by price in cash market.
Futures contracts are securities, much like a bond or stock, and significantly different. While bonds make you holder of a debt instrument, and shares give you equity, Futures contracts are legally binding agreements that fix conditions for delivery of financial instruments and commodities on a specific date in the future.
Besides the mainstream commodities mentioned above, you can contract several other items like stock indices Futures, lesser known commodities like propane, and of course interest rate products like treasury bills and bonds. Some Futures contracts also hedge weather risks.
Futures markets emerged several hundred years back as a mechanism by which traders sold their goods and services at a point of time in the future, guided by their expectations of harvest or crop yields. Today, all commodity markets and financial markets are connected with each other, with the cash and Futures market functioning together on a daily basis.
Understanding the risks
Futures traders, by nature, are risk takers. Option traders, on their part, are integral to the trading game played by Futures traders. At the same time, it’s worth noting that F&O is a viable standalone vehicle for trading. But you have to know whether F&O is the right for you.
While many experienced traders will say that you need at least ₹1 lakh to start F&O trading, the truth is, many talented investors have made quite a fortune starting with as little as ₹10,000. But it’ll be incorrect to forge an impression that the odds will be on your side, if you start trading low.
The reality of the market is that different people perform differently depending on their trading acumen and the level of experience. A Futures trader starting off with ₹1 lakh may lose a large amount of money, just as you could with your ₹10,000.
If you don’t have much capital and is unsure about how to proceed, you have to reconsider your trading strategy altogether, and come up with a new plan. A lot of discipline is required to pocket profits in the F&O market. You must have a robust trading plan in place or consider managed F&O contracts.
Many people consider Futures trading to be risky and calls for active participation from traders and investors. It can be done successfully on when you’re serious about it. This means you have to constantly modify your trading plans by monitoring the markets and catering to its demands.
Trading isn’t investing. A great part of it is plain speculating i.e. taking a risk, hoping to profit from fluctuations in the market. Speculating stock movements successfully, calls for predicting outcomes, analyzing situations, and betting your money on one side of the trade, depending on which, you have to speculate whether the market will go up or down.
To become a successful F&O trader, you must be connected to the global economy through internet, TV, and other media like newspapers and investment journals. It’ll help you keep updated about what’s happening around the world that may have an effect on the economy.
Course description
The cracking F&O course description is as follows.
Introduction: You’re introduced to F&O trading and get to know of its background history.
Importance: In this section you get to know about the F&O market participants and the importance of derivatives.
Indices: You learn about the F&O market evolution and the type of indices at play.
Futures and forwards: This section teaches you about futures and forwards foundation, terminologies used in Futures trading, contract expiry dates, and positions in futures.
Option: This section is divided into six parts. It introduces you to Options trading, followed by trading terminologies, Option pricing, classification, premium, and use of Options.
Call Spread Start: This section is divided into six parts. You are introduced to Call spread, followed by examples of trading strategies using Options, bear Put spread, unlimited profit potential, explaining short straddle graph, and butterfly ending.
Requirements
F&O brokers and traders extend investment management services to clients of financial institutions and investment firms. They are usually required to have a bachelor’s degree in finance or accounting. They should also have the National Stock Exchange (NSE) certification to pursue a career in F&O broking and trading.
Important information: Some firms may require a MBA to pursue F&O broking and trading. On-job hands-on training programs are provided by most companies after recruitment. It helps you to acquire practical experience and work for learning a professional license. An F&O trader after a number of years of experience become adept for several brokerage opportunities. F&O traders, in training programs study the sale of commodities and securities, SEBI regulations on investments, and how to manage the financial portfolios of their clients. Internship as a trainee is recommended before pursuing a career in F&O trading and broking.
Target audience
The cracking F&O training course is aimed at professionals and students who want to master it. It’s also meant for stock market professionals who want to specialize in F&O trading or advisory services.
Career benefits
The cracking F&O training course can get you the headway in several careers in investment and capital markets. You not only become an F&O trader or broker you can work as a business development or relationship manager, advisor for mutual fund houses, and market and distribute their products. Relationship advisors/managers help investors in financial planning by recommending them the best investment portfolio. They build customer relations. Graduates with the EduCBA certification may work as an assistant to an F&O broker. They can work independently as advisors, agents, or distributors to sell investment instruments. Qualified professionals with a commerce, finance, mathematics, management or economics background can pursue a career as a portfolio manager or a fund manager. Such professionals decide where to invest people’s money, realizing capital gains or losses and collecting the interest income or dividend. There also exists lucrative job offers for those with a master’s degree in statistics or economics.
FAQs: Some general questions
- Will EduCba prepare me for employment?
EduCba will impart you every knowledge in the book to help you embark on a career in F&O trading. It’ll teach you how to execute a trade and best serve client interest.
- I want to enter the F&O market. How can I do that?
Before you start investing in shares, you should invest in yourself and get prepared for the journey ahead. Educating yourself is the best investment.
- I have no prior experience in capital markets. Will I be able to join the course?
While the cracking F&O training course is for the intermediate level and some background in stock broking may be helpful, newcomers can join it to get a better knowledge about the markets.
- How can I make good money from the F&O market?
Nobody can earn huge profits from the very first day on job. You have to learn the finer points of the profession. You have to watch your seniors. Only experience can make you a seasoned professional.
Testimonials
Gaurav Sharma
“EduCba’s course on cracking F&O was a great experience. I learned many things that help me to become more innovative and successful. I gained a lot of knowledge about F&O trading and the stock markets as a whole. The faculty was all leading professionals.”
Sanchari Nawate
“The cracking F&O training course helped me in many ways. I now know almost everything about the capital markets. The practical knowledge has helped me to further my career as an F&O broker. I found the course very productive and useful. I’m thankful to EduCba for giving me the training needed to succeed in my career.”
Suraj Agarwal
“The learning experience at EduCba was superb. The course was immensely helpful. The faculty was always ready to help the students. They provided us with in-depth marketing knowledge for understanding the F&O trading strategy. They helped me to build my interest in the derivatives market.
Dhruv Saxena
“The course was immensely helpful to understand stock market movements. The practical application and implementation helped be understand nuances of the F&O market. I am thankful to EduCba for building my career in stock broking which I’m doing successfully.
| Where do our learners come from? |
| Professionals from around the world have benefited from eduCBA’s Derivatives – Futures and Options courses. Some of the top places that our learners come from include New York, Dubai, San Francisco, Bay Area, New Jersey, Houston, Seattle, Toronto, London, Berlin, UAE, Chicago, UK, Hong Kong, Singapore, Australia, New Zealand, India, Bangalore, New Delhi, Mumbai, Pune, Kolkata, Hyderabad and Gurgaon among many. |
