F&O Stocks: If you trade in the Futures and Options (F&O) segment, then 10 more options will become available from 27th August. According to the National Stock Exchange (NSE), trading of 10 more stocks will start in this segment from August 27. These include Dixon Technologies, Can Finance Homes, Indiamart, Hindustan Aeronautics Limited (HAL), Polycab India, Ipca Lab, Oracle Financial, Syngene International, Indian Energy Exchange and MCX. According to NSE, the market lot information will be available a day before the entry of these stocks into the F&O segment. It has been decided to include these stocks in the segment only on the basis of the standards set by the market regulator SEBI.
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These are the criteria for joining F&O
- Should be among the top 500 stocks by average market cap and average daily traded value in the last six months on a daily basis, based on rolling calculations.
- The median quarter sigma order size of the stock should be more than Rs 25 lakhs in the last six months. Median Quarter Sigma means that the order size should be at least such that it can affect the price of the stock. SEBI approval is required for this criterion.
- The market wide position limit of the stock should be more than Rs 500 crore on a rolling basis. Under this, it is seen whether the stock is being actively traded or is limited to only a few people.
- According to SEBI, if the eligibility conditions are not fulfilled for three consecutive months, then fresh monthly contracts for that security will not be issued. However, the existing contracts and have not expired, they will be allowed to trade till the expiry. Apart from this, fresh strikes can be introduced in the current contract month.
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What are futures and options contracts?
- A futures contract is a contract between two parties to sell or buy securities at a price on a future date. This price is determined at the time of contract. This contract is done through BSE or NSE. On the other hand, in an options contract, an underlying asset gets the rights to sell or buy on a particular day or price and there is no obligation.
- Futures contracts have a maximum trading cycle of three months, with near, next and far months. New contracts come after the expiry of near month contracts. All three contracts are available on any business day. Options contracts also have a three-month cycle.
- F&O contracts expire on the last Thursday of the third month and if this day is a holiday, the contract will expire one business day before that.
- The lot size for Nifty50 contracts is 50. Apart from this, the lot size of other stocks is 40.
(Source: Brokerage and research firm Angel One)