{"id":3142,"date":"2023-02-17T11:14:06","date_gmt":"2023-02-17T05:44:06","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=3142"},"modified":"2025-03-26T10:34:22","modified_gmt":"2025-03-26T05:04:22","slug":"what-is-futures-and-option-fo-contract-in-trading","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-futures-and-option-fo-contract-in-trading\/","title":{"rendered":"What is Futures and Option (F&#038;O) Contract in Trading?"},"content":{"rendered":"<h2>About Futures and Option (F&amp;O) Contract:<\/h2>\n<ul>\n<li><strong>Futures Contract:<\/strong> It is an agreement between buyer and seller to buy or sell an asset at a certain time in the future at a certain price.<\/li>\n<li>The <strong>buyer must purchase or the seller must sell<\/strong> the underlying asset at the set price, regardless of the current market price at the expiration date.<\/li>\n<li>Underlying assets include physical <strong>commodities and financial instruments <\/strong>(stocks, currencies and bonds etc.)<\/li>\n<li>They are subjected <strong>to high risk and<\/strong> can reap unlimited profit or loss.<\/li>\n<li><strong>Option Contract:<\/strong> An option is a contract that gives an investor the right but not the <strong>obligation to buy or sell<\/strong> a commodity at a specified price at a specified future date.\u00a0<\/li>\n<li>They carry <strong>limited risk<\/strong> and can reap either unlimited profit or loss.<\/li>\n<li>Advance is paid in the form of premiums in option contracts.\u00a0<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3>Q1:What is hedging?<\/h3>\n<p>Hedging is an advanced risk management strategy that involves buying or selling an investment to potentially help reduce the risk of loss of an existing position.<\/p>\n<p><strong>Source:<\/strong>\u00a0<a href=\"https:\/\/economictimes.indiatimes.com\/epaper\/delhicapital\/2023\/feb\/17\/et-front\/sebi-seeks-fo-trade-info-from-desi-hedge-funds\/articleshow\/97993008.cms\" target=\"_blank\" rel=\"nofollow noopener\"><u>Sebi Seeks F&amp;O Trade Info from Desi Hedge Funds<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Futures Contract is an agreement to buy or sell an asset at a certain time in the future at a certain price.<\/p>\n","protected":false},"author":5,"featured_media":3143,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-3142","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/3142","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=3142"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/3142\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/3143"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=3142"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=3142"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=3142"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}