It took a while, we know, but we wanted to make the feature as user-friendly as possible. And now that we’re done, we’re super excited for you to try it out.
Option chain, simplified
Trade option contracts in just one click
Wide range of charts & indicators for advanced traders like you
Top traded options
Based on open interest and trading volume
Index and Stock F&O
Now all in one place - your Groww Account
How It Works
Get started with these easy steps.
Create your Account
Quick and free account activation. All your details are secure with us.
Buy & Sell in a click
Buy and Sell futures and options in just a click, it's that simple.
Track your Positions
Track your positions and profit/loss easily on your dashboard
Frequenty Asked Questions
What are Derivatives?
To understand Futures and Options, it is important to have an understanding of Derivatives. In the financial markets, a Derivative is a contract that derives its value from underlying assets. These assets can be stocks, bonds, gold, currencies, market indices, commodities, etc. When you buy a derivatives contract, you earn profits by estimating the future price of the asset(s). There are four types of derivative contracts:
What are Futures?
Futures are Derivatives contracts in which both buyers and sellers have the obligation to buy/sell the underlying asset at a predetermined price respectively. A Futures Contract is an agreement between the buyer and the seller to buy or sell a specified quantity of the underlying asset at a future date at a price agreed upon between them. Hence, at the expiration date, the buyer must buy and the seller must sell the agreed quantity of the asset at the set price regardless of the current price of the asset. Further, these contracts are marked to market every day. In other words, the contract value is changed every day until the expiration date. They are traded on exchanges just like stocks.
What are Options?
Options are Derivates contracts that offer the buyer the right (but not the obligation) to buy/sell the underlying asset at a predetermined price. The buyer can also choose to allow the Option to expire. The seller has an obligation to execute the contract. They are traded on exchanges just like stocks. An Option contract has four elements:
Strike price: This is the price at which the seller and the buyer of the Option agree to enter the Option contract.
Premium: The buyer of an Option contract makes a payment to the seller to earn the right to an Option contract. This is called Premium.
Expiration day: An Option contract gives the buyer the right to buy/sell the underlying asset. The Expiration Day is the last day that the owner of the Option can exercise the right.
Lot Size: Every Options contract has a fixed number of units of the underlying asset. This is the Lot Size.
It is important to note that the buyer of an Option does not purchase the assets. Investors pay the premium amount to buy the Option and exercise their right if the market moves in their favor.
What are the different types of Options?
There are two types of Options contracts:
Call Option – Gives the owner of the Option the right to buy the underlying asset at the strike price on or before the expiration date of the contract. Example: Let’s say that you buy a Call Option on ABC Limited for June having a strike price of Rs.1000 and a premium of Rs.50 for a lot size of 100 shares. This means that you have the right to buy 100 shares of ABC Limited at Rs.1000 anytime until the 30th of June. To buy this right, you have to pay a premium of Rs.5000 (Rs.50 x 100 shares). On the expiration date, if the price of the share is Rs.1100, then the buyer of the Option can exercise his right to buy the shares at Rs.1000 and sell them immediately for a profit. The net earnings would be: Net Profit = Selling Price – Buying Price – Premium Net Profit = 110000 – 100000 – 5000 = Rs.5000 However, on the expiration date if the price of the shares falls to Rs.900, then the buyer of the Option can allow the contract to expire and book a loss of Rs.5000 (premium amount) as opposed to buying the shares at Rs.1000 and selling them at Rs.900 and booking a higher loss of Rs.10000. Therefore, the Call Option allows the buyer to limit losses while securing unlimited profit potential. This is a good investment avenue for investors who believe that the stock price will rise in the near future.
Put Option – Gives the owner of the Option the right to sell the underlying asset at the strike price on or before the expiration date of the contract. Example: Let’s say that you buy a Put Option on ABC Limited for June having a strike price of Rs.1000 and a premium of Rs.50 for a lot size of 100 shares. This means thatyou have the right to sell 100 shares of ABC Limited at Rs.1000 anytime until the 30th of June. To buy this right, you have to pay a premium of Rs.5000 (Rs.50 x 100 shares). On the expiration date, if the price of the share is Rs.900, then the buyer of the Option can exercise his right to buy the shares at Rs.900 and sell them immediately at Rs.1000 for a profit. The net earnings would be: Net Profit = Selling Price – Buying Price – Premium Net Profit = 100000 – 90000 – 5000 = Rs.5000 However, on the expiration date if the price of the shares climbs to Rs.1100, then the buyer of the Option can allow the contract to expire and book a loss of Rs.5000 (premium amount) as opposed to buying the shares at Rs.1100 and selling them at Rs.1000 and booking a higher loss of Rs.10000. Therefore, the Put Option allows the buyer to limit losses while securing a wide range of potential profits. This is a good investment avenue for investors who believe that the stock price will fall in the near future.
What is the Strike Price of an Option?
Strike Price is the price at which the Option contract can be executed.
Call Option – it is the price at which the owner of the Option can buy the underlying asset
Put Option – it is the price at which the owner of the Option can sell the underlying asset.
What is the Expiration Date in an Options Contract?
The Expiration Date of an Option is the last date by which the owner of the contract can exercise the right to buy or sell the underlying asset. In India, monthly Options Contracts expire on the last working Thursday of the month. If that day is a market holiday, then the Option expires on the previous working day. In the case of weekly Options, the contract expires every Thursday
How is the premium of an Options Contract calculated?
There are various factors that affect the calculation of the premium of an Options Contract:
Price of the underlying asset(s) – The premium of an Options contract changes with the price of the underlying asset(s).
Call Option – If the price of the underlying asset(s) increases the premium of a Call Option increases too and vice-versa.
Put Option – If the price of the underlying asset(s) increases the premium of a Put Option decreases and vice-versa.
Intrinsic Value – Intrinsic Value is calculated as the difference between the strike price and the current market price of the option. This is calculated assuming that you exercise the option today
Call Option – If the intrinsic value increases the premium of a Call Option decreases and vice-versa.
Put Option – If the intrinsic value increases the premium of a Call Option decreases and vice-versa.
Volatility of the underlying asset(s) – The volatility in the price of the underlying asset(s) also impacts the premium of the Options contract. If the volatility is higher, the premium will be higher and vice-versa.
Time to expire – The time left for the contract to expire has a bearing on the premium too. If the expiration date is close, the premium will be lower since the buyer of the contract will have a shorter duration to get the price of the underlying asset(s) to move in a favorable direction.
Prevailing interest rates – The existing risk-free interest rates in the country also have a minimal impact on the premium of an Options contract. If the interest rates increase, the premium tends to increase too and vice-versa.
Dividends – If an Option is based on stocks and the company declares a dividend, then it can impact premium pricing. SEBI mandates Options prices to be adjusted for non-dividend days when the company announces a dividend of more than ten percent. Typically, a higher dividend leads to a drop in premium.
What are Index Options?
All Options that have a Stock Market Index as the underlying are Index Options. This allows investors to trade on the entire market instead of individual securities.
What are American Options and European Options?
An American Option is an Options contract that can be exercised on or before the expiration date. Options on individual stocks are American Options. A European Option is an Options contract that can be exercised only on the expiration date. Index Options are excellent examples of European Options.
How do I buy Options?
You can buy/sell Options contracts through broking firms that are registered members of the BSE or NSE. These brokers provide online platforms and/or mobile applications allowing you to trade in Options at will. Before opening an account, ensure that the broker offers Options trading and supports all kinds of Options like equity, currency, commodity, etc.
Open an account with a stockbroker
Login to the portal or mobile application
Go through the Options contracts available
Select the desired one
Enter order details
Place the order
Trading in Options is similar to trading in shares.
What are Naked and Covered Options?
There are different strategies followed by investors while trading in Options.
When you exercise your right to sell an Option but hold the underlying asset in case the buyer exercises the right, it is called a Covered Option.
If you don’t hold the underlying asset, then it is called a Naked Option.
What are In-The-Money (ITM), At-The-Money (ATM), and Out-Of-The-Money (OTM) in Options?
These are terms that signify the position of the strike price of the Option compared to the current price. In The Money
Call Option – If the current price of a Call Option is higher than the strike price, then it is said to be In The Money or ITM.
Put Option – If the current price of a Put Option is lower than the strike price, then it is said to be In The Money or ITM.
At The Money If the current price equals the strike price, then the Option is said to be At The Money or ATM.
Out of The Money
Call Option – If the current price of a Call Option is lower than the strike price, then it is said to be Out Of The Money or OTM.
Put Option – If the current price of a Put Option is higher than the strike price, then it is said to be Out Of The Money or OTM.
How do I use Call and/or Put Option?
When you are looking at an Option, assess the underlying asset(s) and try to estimate the direction its price might take in the coming month.
If you think the price will increase... In these cases, you can consider BUYING a Call Option or SELLING a Put Option as it will put you in a position to earn profits. If you think the price will decrease... In these cases, you can consider SELLING a Call Option or BUYING a Put Option as it will put you in a position to earn profits.
What is the difference between trading in Stocks and Options?
There are many differences:
Expiration Date – Options have an expiration date. You need to trade them on or before the said date. However, there is no expiry date for stocks.
Delivery of stocks – When you buy stocks, you need to pay the market price and take delivery. On the other hand, when you buy Options, there is no delivery. These contracts are settled in cash. So, if your Options contract expires and you are in profit, then you will receive the profit amount credited to your bank account.
Amount of investment – When you buy a stock, you have to pay the market price of the stock. However, if you buy an Options contract with the same stock as the underlying asset, you have to pay a marginal amount. Hence, the amount of investment is low despite offering exposure to the same stock.
Which are the Options trading exchanges in India?
In India, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are Options trading exchanges.
What are the benefits of trading in Options?
Trading in Options offers a range of benefits including:
Low investment – When you buy an Option, you don’t have to pay the entire price of the underlying asset. Instead, a marginal amount needs to be paid called the premium. This allows you to gain exposure to the asset/instrument with a low investment.
Higher profit percentage – Think of a share of a company having a market price of Rs.100 per share. If you were to buy 100 shares, then you will need to make an investment of Rs.10000. Within a month, if the share price increases to Rs.120 and you sell all 100 shares, then you book a profit of Rs.2000. With Options, you can book the same profit by investing a much lower amount.
Works in all market conditions – The best benefit of trading in Options is that you can benefit in all market conditions. All you need to do is create strategies accordingly.
Which are the Long Dated Options?
Options contracts with a maturity of up to three years are called Long Dated Options. While the features of these Options are the same as the monthly Options, they offer certain benefits like:
Long-term exposure to the underlying asset(s)
Allows investors to hedge their equity position
Reduces risk since investors get a larger window to book profits.
It is important to remember that these Options usually have a higher premium.
What are the charges associated with Options trading?
When you buy an Option, you will incur the following costs:
Brokerage (depending on the broker)
STT or Securities Transaction Tax
Transaction charges (depending on the stock exchange)
GST of 18% on brokerage and transaction charges
SEBI turnover charges of 0.00015%.
Stamp Duty (as per the applicable state laws)
What are the different types of Futures Contracts?
Here are some common types of Futures Contracts:
Stock Futures – In these Futures, the underlying asset is a stock. Hence, the buyer and seller agree to buy and sell a specified quantity of the said stock at a set rate on the expiration date of the contract.
Index Futures – Investors use Index Futures to speculate the direction in which the indices will move in the near future.
Currency Futures – In these Futures, the underlying asset is a currency. Hence, the buyer and seller agree to buy and sell a specified quantity of the said currency at a set rate vis-à-vis another currency on the expiration date of the contract. This is a good tool to hedge against foreign currency risks.
Commodity Futures – In these Futures, the underlying asset is a commodity like gold, petroleum, silver, etc. These are traded on the National Commodity & Derivatives Exchange and Multi Commodity Exchange in India.
Interest Rate Futures – In these Futures, the underlying asset is a debt instrument like treasury bills or government securities.
What is the difference between Options and Futures?
Here are some differences between Options and Futures Contracts:
Obligation to honor the contract – In a Futures Contract, both the buyer and the seller are obligated to honor the contract. On the other hand, in an Options Contract, only the seller is obligated to honor it. The buyer has the right to honor it or allow it to expire.
Margin requirement – Trading in Futures requires a higher margin than Options.
Risks – Since the buyer of an Options Contract has the choice of not exercising it, the losses are limited to the amount of premium paid. On the other hand, in a Futures Contract, the buyer and seller have to honor it. Hence, the risks are higher.
How are Futures Contracts settled?
Like Options, most Futures Contracts are settled in cash. The final settlement price is the closing price of the underlying asset.
Do I have to pay the Initial Margin and Mark-to-Market Margin to the broker?
Yes. You need to pay the Initial Margin before taking the position – upfront. Also, the outstanding positions in Futures are marked-to-market every day. Hence, you might be required to pay the MTM Margin to the broker too.
Creating proud investors.
You can feel the pride of being a Groww investor in their words.
Groww is an investing platform where users can find the best mutual funds to invest in and can invest their money without any hassles. Groww provides objective evaluation of mutual funds and does not advice or recommend any mutual fund or portfolios. Investor shall invest with their own descretion. Groww does not guarantee any returns and safety of capital.
Groww helps investors in the following way
· By providing objective evaluation of products available on Groww
· By bringing up red flags, if any, involved in the products. However Groww does not guarantee to bring out all red flags
· By being transparent about fees and charges involved in investing in a product
· By clearly representing the risk associated with buying a product
SECURE TRANSACTIONS ON GROWW
All transactions on Groww are safe and secure. Users can invest through SIP or Lumpsum using Netbanking through all supported banks. It uses BSE Star MF (with Member code 11724) as transaction platform.
MUTUAL FUNDS SAHI HAI
Mutual fund investments are very popular with individual investors because of the benefits they provide. Among the many advantages, the most important factors that drive investors to mutual funds are that Investors can
- Start with any amount (as low as 500)
- Diversify across multiple stocks and other instruments like debt, gold etc.
- Start automated monthly investments (SIP)
- Invest without requiring to open DMAT account
All type of mutual funds are available on Groww.
INVESTING IN MUTUAL FUND PORTFOLIOS
Portfolio is collection of mutual funds designed to meet your investment goals. Investing in mutual fund portfolios helps you in diversifying your investments and reduces the risk. Portfolios also help you in assigning an investment goals and make it easy for you to save for and achieve your goals. You can create a portfolio yourself or ask an expert to build it for you.
1. For Stock Broking Transaction 'Prevent unauthorised transactions in your account --> Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile/email at the end of the day...Issued in the interest of Investors.
2. For Depository Transaction 'Prevent Unauthorized Transactions in your demat account --> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from CDSL/NSDL on the same day...Issued in the interest of investors.
3. KYC is a one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (Broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
4. If you are subscribing to an IPO, there is no need to issue a cheque. Please write the Bank account number and sign the IPO application form to authorize your bank to make payment in case of allotment. In case of non allotment the funds will remain in your bank account.
· Investors should be cautious on unsolicited emails and SMS advising to buy, sell or hold securities and trade only on the basis of informed decision. Investors are advised to invest after conducting appropriate analysis of respective companies and not to blindly follow unfounded rumours, tips etc. Further, you are also requested to share your knowledge or evidence of systemic wrongdoing, potential frauds or unethical behaviour through the anonymous portal facility provided on BSE & NSE website.
· Awareness regarding guidelines on Margin collection
1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
2. Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
3. Pay 20% upfront margin of the transaction value to trade in cash market segment.
4. Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.
5. Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.
Issued in the interest of Investors
NextBillion Technology Private Limited is a member of NSE & BSE with SEBI Registration no: INZ000301838, Depository Participant of CDSL Depository with SEBI Registration no: IN-DP-417-2019 and Mutual Fund distributor with AMFI Registration No: ARN-111686. Registered office and Correspondence office - No.11, 2nd floor, 80 FT Road, 4th Block, S.T Bed, Koramangala, Bengaluru – 560034. For any grievances related to Stock Broking/DP, please write to [email protected] , please ensure you carefully read the Risk Disclosure Document as prescribed by SEBI.
Procedure to file a complaint on SEBI SCORES: Register on the SCORES portal. Mandatory details for filing complaints on SCORES: Name, PAN, Address, Mobile Number, E-mail ID. Benefits: Effective Communication, Speedy redressal of the grievances.
NextBillion Technology Private Limited makes no warranties or representations, express or implied, on products offered through the platform. It accepts no liability for any damages or losses, however caused, in connection with the use of, or on the reliance of its product or related services. Unless otherwise specified, all returns, expense ratio, NAV, etc are historical and for illustrative purposes only. Future will vary greatly and depends on personal and market circumstances. The information provided by our blog is educational only and is not investment or tax advice.
Mutual fund investments are subject to market risks. Please read all scheme related documents carefully before investing. Past performance of the schemes is neither an indicator nor a guarantee of future performance.