What are the risks of trading Futures and Options (F&O)?

What are the risks of trading Futures and Options (F&O)?

Futures and options (F&O) trading involves leveraging complex financial instruments, and without proper understanding, it can lead to substantial financial losses. Below are some common risks associated with F&O trading:

1. Execution Risks: F&O orders may be partially executed at significantly different prices due to market volatility and liquidity issues.

2. Options Trading Risks: Buying options can lead to losing the premium paid, while selling options can result in even more significant losses than the initial margin.

3. Futures Trading Risks: Losses could exceed the initial margin if the market moves against your futures position.

4. Margin Shortfall Risks: Dynamic margin requirements for positions may increase, leading to margin shortfalls that must be covered to avoid liquidation.

5. Physical Settlement Risks: There are risks of physical settlement for stock futures and options, including short delivery risks, if they expire in the money.

6. Security Risks:  Providing login information to scammers can result in financial losses.

7. Leverage Risks: Higher leverage in F&O trading can amplify losses beyond the initial margin.

You'll be presented with a Risk Disclosure Document (RDD) upon logging in. This document contains crucial information regarding the risks of trading or investing in capital market instruments.




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