Future and option contracts are derivative products that are traded on the stock market.
These contracts allow an investor to buy or sell a specific amount of stock at a specified price
in the future. The difference between these two types of contracts is that an option contract gives
the buyer the right, but not the obligation, to buy or sell shares at a specific price before an
expiration date.
A future contract obliges both parties to complete the transaction and allows
them to take advantage of any price changes during this time. It is also possible for investors
to use these contracts as hedging instruments against potential losses in their portfolio.
A lot size is a fixed number of shares, options, or futures contracts that can be bought or sold at once.
Sso in derivatives market you can not trade less then one 1 lot size in India. One lot size has different no. of shares
for different stocks or indices products. They also get changed time to time.
In the above table you can easily find the lots size of a stock and its approximate value in rupees according to the latest close price.
You can also filter by lots size and by lot value in the above table to help you to choose the right future and option pproduct for you.
Why there is lot size in f&o?
Because every stock in the equity market has a distinct price, a lot size must be created in order to standardize the contract's value. Lot value or notional value has been set at around ₹ 7.5 Lakhs (approx 9600 USD) by the Securities and Exchange Board of India.
SEBI kept the lot value higher to keep the derivatives out of reach of the small investors who have low understanding of F&O segment.
When the share price in equity market move it also change the notional value of the lot. So time to time lot size also get changed time to time keep the notional value near the standarized value.
Let's take an example to understand this. The share price of stock 'A' in equity market is Rs. 1000 then to standarized the notional value, a lot of 750 shares will be created.
Now suppose in a few days the price of stock 'A' dropped to Rs. 600 then its lot size will be changed to 1250 to keep the total notional value of the lot to Rs. 7.5 Lakhs.
What you should know about F&O?
Every contract has an expiration date.
Each contract on the spot market reflects an underlying stock or index.
Future price movements mirror those of the underlying asset.
Contracts are exchanged in multiples of a predetermined Lot Size.
Index futures are offered in monthly series, whereas index options have weekly and monthly expiration dates. Two popular index deriatives are Nifty & BankNifty.
Due to the high degree of speculation, hedgers or speculators typically trade in the F&O segment. Three months is the maximum term for a futures contract.
FAQs
What is F&O in share market?
F&O in the share market is the abbreviation for futures and options. It is a type of derivative contract.
F&O contracts are agreements to buy or sell an asset at a particular time and price.
These contracts are based on future market prices, which are agreed upon before the contract date.
What is lot size in F&O?
Lot size is the amount of shares that are traded in a single transaction. In future and options markets,
the lot size is a measure of the total value of shares that can be bought or sold at one time. You can buy / sell less then the lot size
of a particular share. But you can buy / sell multiple lots.
Why there are different lot sizes for different stocks?
Lot size is based on the stock price to equalize the total amount of a contract.
Lot sizes get changed time to time according to the underlying stock price.
What is the need of the lot size in F&O?
Because F&O trading is very speculative and dangerous. As a result, lots for the F&O industry are designed to keep less knowledgeable investors away from derivatives.
Which company has the biggest lot size in NSE f&o.
Currently Idea has highest no. of shares in its lot. It has a lot size of 70,000 shares
Which company has the smallest lot size in F&O listed on NSE.
Currently MRF has lowest no. of shares in its lot. It has a lot size of only 10 shares in single lot.
Disclaimer :
Trading or investing involves a high level of risk,
including the loss of all of your investment.
No information on our website should be interpreted as an investment / trading suggestion.
We are not providing any kind of financial tips or recommendations.
We just provide the data that you can analyse yourself and make your own decision.
You are solely responsible for any of your action.
We are not SEBI registered analysts.
Our website or any person associated with our website are not liable for any kind of losses, fees or charges etc.
We have tried our best to keep the data accuracy. Though we process the data directly available from the exchanges,
but still we don't guarantee that our data is accurate and up to date. Verify the accuracy of data from other sources as like NSE and BSE websites.
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