Future and option Stocks are two types of financial contracts that allow traders to speculate on the price movements of various underlying assets, including stocks, bonds, commodities, and currencies. In this context, future and option stocks refer to the future and option stocks that are based on individual stocks.

Future Stocks

Futures stocks are agreements to buy or sell an underlying asset at a predetermined price and date in the future. In the case of stock futures, the underlying asset is a particular stock, and the price and date are determined by the contract specifications. For example, a trader might buy a futures contract on Apple stock with a contract size of 100 shares and an expiration date of three months from now. If the price of Apple stock increases during that time, the trader can sell the futures contract at a profit.

Option Stocks

Options stocks, on the other hand, give the holder the right, but not the commitment, to buy or sell an underlying asset at a predetermined price and date in the future. In the case of stock options, the underlying asset is again a particular stock, and the price and date are determined by the stock's specifications. There exist two kinds of options: calls and puts. A call option gives the holder the right to buy the underlying asset at a predetermined price, while a put option gives the holder the right to sell the underlying asset at a predetermined price. For example, a trader might buy a call option on any stock with a strike price of Rs.3,000 and an expiration date of one month from now. If the stock price rises above Rs.3,000 during that time, the trader can exercise the option and buy the stock at the lower strike price.

Both future and option stocks can be used for hedging or speculation purposes. Hedging involves using these Stocks to offset potential losses in other investments. For example, a stock trader might buy a put option on a particular stock as insurance against a potential drop in its price. If the price does drop, the put option will increase in value, offsetting some or all of the losses on the stock. The speculation involves using these contracts to make bets on the direction of the underlying asset's price movements. For example, a trader might buy a call option on a particular stock if they believe the price will rise, or sell a futures contract on a particular stock if they believe the price will fall.

Conclusion

Future and option stocks are financial contracts that allow traders to speculate on the price movements of individual stocks. Futures contracts are agreements to buy or sell an underlying asset at a predetermined price and date in the future, while options contracts give the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price and date in the future. These contracts can be used for hedging or speculation purposes, depending on the trader's objectives.