What is F&O in Share Market? – Stock List, Types & Difference

This article will examine F&O in the Share Market, including its definition, types, differences, and list of stocks.

What is F&O in Share Market?

F&O stands for “Futures and Options” and refers to a type of financial instrument traded in the stock market.

F&O contracts are typically used by traders and investors to hedge against price fluctuations in the underlying asset, or to speculate on the direction of its price movement.
They are traded on derivatives exchanges, and are subject to various regulations and margin requirements.

It’s important to note that F&O trading is a complex and high-risk activity, and is typically only recommended for experienced investors who have a thorough understanding of the underlying assets and the associated risks.

Types

There are two main types of F&O contracts traded in the stock market:

1. Futures:
   A futures contract is an agreement between two parties to buy or sell an underlying asset at a future date and a predetermined price.
   In a futures contract, both the buyer and the seller are obligated to fulfill the terms of the contract on the expiration date.
   Futures are typically used to hedge against price fluctuations or to speculate on the price movements of the underlying asset.
2. Options:
   An options contract is a derivative contract that gives the buyer the right (but not the obligation)
   to buy or sell an underlying asset at a predetermined price and expiration date.
   There are two types of options: call options and put options.
   A call option gives the buyer the right to buy the underlying asset at a predetermined price,
   while a put option gives the buyer the right to sell the underlying asset at a predetermined price.
   Options are typically used for hedging or for speculation on the price movements of the underlying asset.

Futures and options contracts can be traded on various stock exchanges such as
National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Multi Commodity Exchange (MCX), etc.
It is important to note that trading in F&O contracts involves high risk and should be done only after understanding the risks and having a proper risk management strategy in place.

Difference between F&O in Share Market

Here are some key differences between Futures and Options contracts in the Share Market:

1. Obligations:
   In a Futures contract, both the buyer and the seller are obligated to fulfill the terms of the
   contract on the expiration date,
   whereas in Options, only the seller is obligated to fulfill the terms of the contract
   if the buyer chooses to exercise the option.
2. Flexibility:
   Options provide more flexibility to the buyer as they have the right but not the obligation to
   buy or sell the underlying asset,
   whereas in Futures, the buyer and seller have to stick to the agreed-upon terms of the contract.
3. Risk:
   The risk is higher in Options as the buyer has to pay a premium to the seller for the right to
   buy or sell the underlying asset, which is non-refundable,
   whereas in Futures, the risk is limited to the initial margin amount paid by both parties.
4. Profit Potential:
   In Options, the profit potential is unlimited as the buyer can earn profits by exercising the option when the market moves in their favor,
   whereas in Futures, the profit potential is limited to the difference between the contract price and the market price at the time of expiration.
5. Margin Requirements:
   Margin requirements for Futures are usually higher than for Options as Futures involve more obligation and risk, whereas Options require only the premium payment.
6. Liquidity:
   Futures are more liquid than Options, as there is a higher trading volume for Futures in the market.

What are F&O Stocks?

Here are some key points about F&O stocks in the Indian stock market:

1. F&O stands for "Futures and Options" and refers to a type of financial instrument traded in the stock market.
2. F&O stocks are those stocks that are available for trading in the F&O segment of the stock market.
3. F&O contracts are typically used by traders and investors to hedge against price fluctuations in the underlying asset, or to speculate on the direction of its price movement.
4. F&O stocks are typically large-cap stocks with high liquidity, as they are preferred by traders and investors who seek to trade in these contracts.
5. Some popular F&O stocks in India include Reliance Industries Ltd., HDFC Bank Ltd., Infosys Ltd.,
   State Bank of India, Tata Consultancy Services Ltd., ICICI Bank Ltd., Larsen & Toubro Ltd.,
   Axis Bank Ltd., Bharti Airtel Ltd., Bajaj Finance Ltd. and many more.
6. F&O stocks can be traded on various stock exchanges in India such as National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Multi Commodity Exchange (MCX), etc.
7. Trading in F&O contracts involves high risk and should be done only after understanding the risks and having a proper risk management strategy in place.
8. It's recommended that traders and investors do their own research and consult with a financial advisor before trading in F&O contracts.

F&O Stocks List

There are many stocks available for trading in the F&O segment of the Indian stock market.
Here is a list of some of the popular F&O stocks in India:

1. Reliance Industries Ltd.
2. HDFC Bank Ltd.
3. Infosys Ltd.
4. State Bank of India
5. Tata Consultancy Services Ltd.
6. ICICI Bank Ltd.
7. Larsen & Toubro Ltd.
8. Axis Bank Ltd.
9. Bharti Airtel Ltd.
10. Bajaj Finance Ltd.

This is not an exhaustive list, and there are many other stocks available for trading in the F&O segment of the Indian stock market.
It's important to note that F&O trading involves high risk and should be done only after understanding the risks and having a proper risk management strategy in place.
It's recommended that traders and investors do their own research and consult with a financial advisor before trading in F&O contracts.

Here are some frequently asked questions (FAQs) about F&O in the Indian stock market:

FAQs