Futures in one paragraph
A future is a contract to buy or sell an underlying (a stock or an index like Nifty) at today’s agreed price, settled at a fixed expiry. You don’t pay the full value — you deposit a margin (roughly 10–15% for index futures), and your profit/loss is adjusted daily (mark-to-market). Because one lot controls a large value, small moves create large P&L in both directions.
Options in one paragraph
An option gives the buyer the right (not the obligation) to buy (Call) or sell (Put) the underlying at a chosen strike price before expiry, for an upfront premium. An option buyer can lose at most the premium. An option seller/writer collects the premium but takes on potentially large, margin-backed risk — writing options is not a beginner activity.
A concrete example
Payoff charts, Greeks and a strategy builder are built into the PCJ Invest platform, so you can see exactly this picture before you place a trade.
Why F&O demands respect
SEBI’s published study found 9 out of 10 individual equity F&O traders made net losses, with average losses near ₹50,000 — and loss-makers spent a further 28% of their losses on transaction costs. Leverage, time decay (theta) on bought options, and overtrading are the usual culprits.
Rules that protect you: trade only with money you can afford to lose, size positions so one bad trade cannot dent your capital, prefer defined-risk strategies, and understand the product before the trade — our RMs can walk you through the platform’s strategy builder.
Key terms
Lot size
F&O trades in fixed lots (e.g. Nifty 75). You cannot trade fractional lots.
Premium
The price of an option — what the buyer pays and the seller receives.
Mark-to-market
Daily settlement of futures P&L in cash to your account.
Theta (time decay)
The value an option loses every day as expiry approaches, all else equal — it works against option buyers.
SPAN + Exposure margin
The exchange-set deposit required to carry futures or short options; it changes daily with volatility.
Test yourself
1. The maximum loss for an option BUYER is…
A buyer can lose only the premium; sellers face far larger risk.
2. Futures P&L is settled…
MTM credits/debits your account every trading day.
3. SEBI’s study found what share of individual F&O traders lost money?
It found 9 out of 10 individual traders in equity F&O incurred net losses.
4. Time decay (theta) hurts…
Bought options lose time value daily; sellers earn it.
FAQs
Yes — SEBI requires brokers to verify financial capacity before activating derivatives.
Roughly 10–15% of contract value, set daily by the exchange — estimate it with our F&O Margin calculator.
Yes — futures and short options can lose more than the margin deposited. Only option buying caps loss at premium.
Futures and options are contracts whose value depends on an underlying asset — a stock, index, commodity or currency pair. A future is an agreement to buy or sell at a fixed price on a future date. An option gives you the right — but not the obligation — to do so, for a price called the premium. They are tools for hedging and trading, and they carry leverage, which magnifies both profit and loss.
Very. SEBI's own study found that about nine out of ten individual F&O traders lost money, with sizeable average losses. Leverage means a small market move against you can wipe out a large part of your capital. If you still want to trade derivatives, start small, learn payoff structures, always use stop losses, and never trade with money you cannot afford to lose.
Margin is the deposit the exchange requires you to keep with the broker to take a leveraged position. It ensures you can honour your obligations if the market moves against you. Margins change with volatility, and if your losses eat into the margin, you get a margin call asking for more funds — failing which the position may be squared off.
SEBI requires brokers to collect income proof before activating derivative segments because F&O involves leverage and is suitable only for investors who can bear the risk. A recent salary slip, six months' bank statement, ITR acknowledgement or demat holdings statement usually works.
Muhurat trading is a special one-hour trading session that exchanges hold on Diwali evening, considered an auspicious time to invest. The exact timing is announced by NSE and BSE each year. It is a symbolic session — liquidity is thinner than normal hours, so trade thoughtfully.
No. PCJ does not run a research desk and does not provide any investment advice, tips or recommendations. We provide the trading platform, market data and execution only; your Relationship Manager assists with account and service support, not with what to buy or sell. Every investment decision is entirely your own — SEBI registration and NISM certification do not guarantee returns, and no honest broker will promise them.
Yes. PCJ Holdings is a SEBI-registered stock broker and a depository participant with NSDL, and a member of NSE, BSE and MCX since 2006. Your shares are not held by us — they sit in your own demat account with the depository (NSDL) in your name. Your funds are kept in client bank accounts that are separate from the company's own money, as SEBI rules require. Exchanges also run regular inspections of every member broker.
Educational content for general awareness only — not investment, trading or tax advice. Investments in securities market are subject to market risks; read all related documents carefully. Figures/rates are indicative for FY 2025-26 and may change.