Equity Derivatives:

Equity derivatives are a class of derivatives whose value is partly derived from one or more underlying securities. The most common derivatives are options and futures. Equity derivatives are actively traded over exchanges and over-the-counter.

Equity derivatives are used as instruments to hedge risk in stock portfolios or speculate moves in indexes​.

 

How to trade in Equity Derivatives with us?
We aspire to make investing in stock markets simple and hassle-free for our customers. All you have to do is just open a Demat and trading account and use our state-of-the-art platforms to trade in equity derivatives seamlessly.​​

 

What types of Equity Derivative Instruments are available for trading?
With us, you can trade in both Futures and Options (FnO). Further, you can choose from among different types of equity derivatives

You can trade in both Futures and Options (FnO) with SBISMART

Futures:
Futures are derivative contracts through which parties obligate to transact an asset at a pre-determined future price and date. Here, you, as a buyer or seller, must purchase or sell the underlying asset at the pre-fixed price, regardless of its current market price.
Futures allow you to speculate the direction of the price of an underlying asset and firms can use it to hedge their products against adverse price movements.​

 

Options:
Options are another type of equity derivative whose value depends on the value of an underlying instrument. This instrument can be a stock, index, currency or commodity or any other type of security. There are two options:
Call option: Here, you’ll get the right (but not the obligation) to buy a given quantity of an underlying asset at a specific price on or before a pre-determined future date. To buy the call option, you need to price in the form of option premium​.
Put Option: You’ll get the right (but not the obligation) to sell a given quantity of an underlying asset at a specific price on or before a pre-determined future date. With this option, you can lock a minimum period for selling certain security. In case, you find that market price is higher than strike price, you can sell the security at the market price​.

 

 

Different types of Equity Derivatives offering:

Normal (Carry – Forward):
Here, you can conduct settlement-based commodity trading by buying or selling positions in futures or options and holding the positions beyond the current date up to specified expiry date.
In case, it is advantageous for you to close the position before the expiry date, you can even square it off.​
Intraday:
In this form of trading, buying and selling stocks takes place on the same day. Equity shares and stocks in intraday trading are brought or sold not with the objective of investing but to earn a profit by leveraging the movement of stock indices.
With Intraday trading, you can reap the rewards of daily market movements and trade in stocks for a limited time within a day. This gives you the opportunity to take advantage of intraday movements in the share’s price on the same day without taking the delivery of those shares.

 

Cover order:
Cover Order is an order which is placed with a Stop Loss Order, which is mandatory. This reduces the risk due to which the margin requirement also reduces automatically, thereby, limiting your losses.
If you are an intraday trader, you can opt for a Cover Order, which brings discipline in your intraday trading activity. Note that when you place a Cover Order, the Stop Loss order can’t be cancelled as it will make the entire concept of this order invalid.​
 
After-Market Orders:
After Market Orders of AMO is a feature that allows you to place an order after the regular trading hour. The normal trading time for the Indian equity market is from 9:15 am to 3:30 pm. If you were busy throughout the day and were unable to place an order, you can do so through After Market Order (AMO).  AMO allows you to place an order after the normal market orders and gives you the flexibility to take time and place an order after research.