How to Trade Futures and Options in Angel Broking

What Are Futures and Options?

Before we get into the nuts and bolts of trading, it's crucial to understand what futures and options actually are. Futures are financial contracts obligating the buyer to purchase, and the seller to sell, an asset at a predetermined future date and price. Options, on the other hand, are contracts that give the buyer the right, but not the obligation, to buy or sell an asset at a specific price on or before a certain date.

These instruments are primarily used for hedging or speculation. Hedgers use them to protect against price movements, while speculators aim to profit from price fluctuations.

Why Choose Angel Broking for Futures and Options Trading?

Angel Broking is one of India's leading full-service retail brokers, offering an intuitive platform for trading a wide range of assets, including futures and options. It is known for its user-friendly interface, powerful research tools, and excellent customer support, making it a perfect choice for beginners and experienced traders alike.

Step 1: Setting Up Your Account

The first step to trading futures and options in Angel Broking is opening a Demat and trading account. Here’s how:

1. Sign up: Visit the Angel Broking website or download their mobile app. Enter your basic details, like your name, email, phone number, and PAN card.
2. Complete KYC: Upload necessary documents, including identity proof, address proof, and income proof for KYC (Know Your Customer) verification. Angel Broking makes this process quick and digital.
3. Link Bank Account: You'll also need to link your bank account to facilitate fund transfers.
4. Activate Futures and Options Segment: Once your trading account is set up, you must request the activation of the futures and options segment.

Step 2: Depositing Funds

Before you start trading, ensure that your trading account is sufficiently funded. You can transfer funds through net banking, UPI, or bank transfers directly from your linked bank account.

Angel Broking allows you to transfer funds seamlessly using their smart transfer feature, which is integrated into their trading platform. You'll find the option under the "Funds" section of the app or web portal.

Step 3: Choosing the Right Contract

Once your account is active and funded, the next step is choosing which futures or options contract you wish to trade. Contracts can be based on several underlying assets like stocks, indices, commodities, or currencies. The choice depends on your risk appetite, trading strategy, and market research.

Key Considerations:

1. Expiration Date: Futures and options contracts have a limited lifespan, expiring on a specific date, usually the last Thursday of the month in India.
2. Strike Price (for Options): This is the price at which you have the right to buy (in a call option) or sell (in a put option).
3. Lot Size: Contracts are traded in lots. The size of the lot varies based on the underlying asset. For example, Nifty options have a lot size of 75 units.

Step 4: Placing Your Trade

After you've selected a contract, it's time to execute your trade. Here's how to place orders in Angel Broking:

1. Go to the Trading Dashboard: In the app or on the web, navigate to the dashboard where you can search for futures and options contracts by typing in the name of the underlying asset (e.g., "Nifty").
2. Buy or Sell: Based on your strategy, choose whether to buy (go long) or sell (go short) the contract.
   • For Futures: Choose the number of lots and place the order.
   • For Options: Select the type of option (Call or Put), the strike price, and the number of lots before placing your order.
3. Order Types: You can also choose between different order types such as Market, Limit, or Stop-loss orders depending on how you want your trade to be executed.

Step 5: Monitoring and Managing Your Position

Once your trade is live, the work isn’t over. Constantly monitor your open positions using Angel Broking's real-time analytics and charting tools. Angel Broking provides advanced charts, price alerts, and market news to help you stay informed about price movements.

1. Profit and Loss: The price movement of the underlying asset directly affects your profit or loss in a futures contract. In options, your position gains or loses value based on the price of the option premium.
2. Adjusting Positions: If the market is moving against your position, you can choose to exit the trade early, adjust it by buying or selling more lots, or hedge it with another strategy.
3. Expiry Consideration: Close or roll over your futures positions before expiry, or they will automatically be settled. For options, consider exercising your right if in-the-money or let the option expire if out-of-the-money.

Step 6: Exit Strategies

When trading futures and options, having an exit strategy is crucial. Whether you're locking in profits or minimizing losses, deciding when to exit is as important as entering the trade. Angel Broking provides tools like stop-loss orders to help automate your exit strategy.

1. Manual Exit: You can choose to manually square off your position by selling or buying back the contract.
2. Auto-Square Off: Angel Broking automatically squares off open positions before the market closes on expiry day if you haven’t done so yourself.
3. Rollover (for Futures): If you expect the trend to continue, you can roll over your position to the next month’s contract.

Advanced Strategies

For more experienced traders, Angel Broking also offers tools for implementing advanced options strategies, such as:

1. Straddles and Strangles: Used to profit from significant moves in either direction.
2. Spreads (Bull, Bear, or Butterfly): Used to limit risk and reward within a specified range.
3. Hedging: Hedging your portfolio with options to reduce risk during volatile markets.

Risk Management and Discipline

Futures and options trading can be highly lucrative, but it is also risky. It’s essential to have a clear risk management strategy in place. Avoid emotional trading and always trade within your risk tolerance.

1. Diversify: Don’t put all your capital into one position.
2. Stop-Loss Orders: Always use stop-loss orders to prevent significant losses.
3. Leverage Control: Futures trading involves leverage, meaning small price movements can result in large gains or losses. Be mindful of your leverage and exposure.

The Role of Research and Tools

Angel Broking provides research tools and insights that can give you an edge in your trading. Their in-house analysts provide recommendations, which you can use as a basis for building your trading strategy.

1. Market Reports: Daily reports on key market movements, upcoming events, and trends.
2. Stock Screeners: Powerful stock screening tools allow you to identify the best opportunities.
3. Economic Indicators: Keep an eye on macroeconomic data like interest rates, inflation reports, and employment figures that affect futures and options prices.

Conclusion

Trading futures and options in Angel Broking opens up a world of financial possibilities. With the right knowledge and tools, you can effectively manage your risks, maximize your profits, and participate actively in both bull and bear markets. The platform’s robust features, combined with careful planning and disciplined trading, make futures and options an excellent choice for diversifying your investment portfolio.