SHARETIPSINFO >> Articles Directory >>Derivative trading at the stock market exchanges BSE and NSE - Future stocks

 

Future Stocks

Future stocks are those stocks that are available for derivative trading at the exchange. At a particular stock exchange all the listed stocks are not available for derivative trading, that means you can not buy future contracts or do option trading for these stocks. You can buy future contracts and do derivative trading only for the future stocks.

Trading with the future stocks is a profitable proposition for the investors. Moreover, you need not pay for the total value of the stocks that you buy with the future contract. For example if you are buying 100 stocks of a company in the cash segment, you can get that number of stock in one lot while buying the future contract and for that you have to pay for that one lot, which is lower in price in comparison with the total value of 100 stocks in the cash segment. So, while trading in future stocks you are getting the same profit by investing less. That will definitely increase you profit percentage.

In future trading you can also benefit by short selling the future contract. Therefore, if you are expecting a particular stock to fall in the near future, even then you can earn from that stock by selling a future contract or doing short selling.

Trading in future stocks is always profitable, but the investors should always keep in mind that the amount of loss in future trading is also higher than the cash segment, if the speculations go wrong. Moreover, as you have to close the settlement at a stipulated time as per the future contract, you can avoid the loss by holding the stock. So, while dealing in future stock you need to absolutely sure about the stock and hence you need to be extra cautious in choosing the future stock.

 

 

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