A step by step guide to trading in Future & Options

Transcription

1 A step by step guide to trading in Future & Options

2 Experience fast, easy, transparent and hassle-free trading with ICICIdirect.com! No paperwork No regulatory hassles No delays in execution of orders

3 Step 1: Log on to To start trading, you need to login by clicking on the Login button.

4 Step 2: Login Enter your user ID and password and log in to the Trading screen.

5 Step 3: Click to select account On the Trading page, click SELECT ACCOUNT as shown. (According to regulatory guidelines, NRIs can trade in F&O through the Non PINS NRO - NPNRO account only. To trade in F&O, you should have sufficient funds in your NPNRO account.)

6 Step 4: Select account Select your NPNRO account and F&O-Trading as shown and click Select.

7 You have now navigated to the F&O Trading page

8 TRADING IN FUTURES FUTURES A future is a legally binding agreement to buy or sell a financial instrument sometime in future where in quantity (lot size) and delivery time (expiry date fixed) Contracts are standardized and trading is centralized To start trading in F&O, you need to allocate funds in the F&O segment from your Non-PINS NRO account. To do so, click Modify Allocation as shown.

9 Step 5: Allocation of Funds Say you want to add Rs. 9,80, to the Futures & Options segment. Add the corresponding amount, select the drop down shown and then click Submit. This will transfer Rs. Rs. 9,80, from your net withdrawal balance to gross allocation.

10 The corresponding allocated amount would get reflected, in Limit page section as shown below. You can see your purchasing power in this section. Limit = (Allocation +Amount receivable by you Amount payable by you)

11 To know about Lot Size, Initial Margin Percentage and Minimum Margin Percentage for all F&O scrips, click Stock List, as shown, select the Product Type (Futures or Options) and click View. Step6 : To place orders from Stock List You can select the product & stock code name in which you would like to trade. Say for example, you select FUTURES as product & NIFTY as stock code, this would land you to the screen shown in page 14 of this document.

12 Calculation of Margin Requirement for F&O Visit the Know Your Margin page by clicking Know Your Margin, as shown. Fill the corresponding entries as per the product type and click Select Contract In the following example, the margin requirement is calculated as Rs. 23,218 to buy 1 lot (50 units for NIFTY)of Futures Contract for NIFTY MAY. at Rs. 3,752.

13 Step 6 : To place orders Click Place Order as shown If you know the code of the option, enter it in Stock Code. If not, you can get the code from the Find a Symbol link Select the product as Futures and click Select Contract

14 Step 7: Contract Details You may select the desired contract that you want to buy. For example, if you want to buy the NIFTY May contract, click Buy, as shown. You may also add these stock codes to My Favourites so that on your next log-in you can select them from that list.

15 Step 8: Place an order in Futures Select the desired quantity to be traded. In F&O, you can trade in quantities that are in multiples of lot sizes only. Say you want to buy 1 lot of NIFTY Futures. In this case, the quantity size will be 50 You may put the limit order at your desired price by selecting the Order type as Limit. Or else, during market hours, you may set the Order Type as Market to execute the order at the market price. Then click Submit. The order confirmation screen then appears, where you can verify the order details and confirm the order placed You may also set the Stop Loss Trigger Price. Click Explain for details

16 Step 9:View Order Book To view the status of the orders placed, click 'Order Book'. Select the product as 'Futures',select the corresponding dates and click 'Go'.

17 Trade Book For F&O Click Trade Book. On the resulting page, you will be able to view the details of executed trades only and not all the Orders. You can see the trade date, contract description, action, quantity, price, value, brokerage and order reference as shown below.

18 Step 10 : Squaring off or to add margin Once the orders are executed, to square off the orders placed for profit/loss or to maintain the margin on positions, click Open Positions On the Open Positions page, select the product as Futures and click Go. Click Square Off to place an opposite position / square off order to the initial position order The minimum margin is the margin that should be maintained at all points of time to retain your position. If the margin on your positions falls close to the minimum margin, you can add the margin amount by clicking Add Margin. This step is required to avoid automatic squaring off by the system due to shortage in minimum margin requirement.

19 On clicking Square Off on the Open Positions (previous) page, you would land on the following page, where you need to fill the specifications of the square-off order. Here in our example of 1 lot of NIFTY MAY Futures contract bought at level of 3572, the square off order for this contract would be SELL order as shown below. After filling the details of quantity and price, click Submit to proceed for order confirmation After order confirmation, you can visit the order book by clicking Order Book, where now you can see the details of the original as well as the squared off orders and their status.

20 TRADING IN OPTIONS Select Futures Contract Step 1: Select an Option contract Click Place Order as shown If you know the code of the option, enter it in Stock Code. If not, you can get the code from the Find a Symbol link Select the product as OPTIONS, Option Type as Call and click Select Contract

21 You would have three different-month contracts in each underlying. For Options, the exchange will introduce contracts in each month. Price fluctuations result in a new contract being introduced by the exchange from time to time This page shows the expiry dates, strike price, the minimum lot size and the last traded price (LTP) (always shown in terms of the premium) If you want to buy an Options contract, click Buy. To get a quote, click Get Quote

22 Step 2 : Place an order Select the desired quantity to be traded. In Options, you can trade in quantities that are in multiples of lot sizes only. Say you want to buy 1 lot of NIFTY Options. In this case, the quantity size will be 50 You may put the limit order, at your desired price by selecting the Order Type as Limit. Or else, during market hours, you may select the Order Type as Market to execute the order at the market price. Then click Submit. The order confirmation screen then appears, where you can verify the order details and confirm the order placed You may also set the Stop Loss Trigger Price. Click Explain for details

23 Similar to the Futures segment, you can view the status of the orders placed by clicking Order Book, details of executed trades in 'Trade Book' and also square off or close existing orders and book profits / loss by clicking 'Open Positions'. Step 3 & 4 :In order book & trade book,select the product as OPTIONS, select the corresponding dates and click Go Step 5 :After the orders are executed, to square off the orders placed for profit/loss or to maintain the margin on positions, click Open Positions Select the product as OPTIONS and click Go. Click Square Off to place an opposite position / square off order to the initial position order A buyer of an Option can exercise or square off the initial order. All stock options can be exercised before expiry whereas index options can be exercised at expiry only. However, squaring off a contract can be done any time during the validity of the contract If you have sold an Option, the minimum margin is the margin that should have maintained at all points of time to retain your position. If margin on positions falls below the minimum margin, you can add the margin amount by clicking the Add Margin link. This step is required to avoid automatic squaring off by the system. If you have sold the option, you can square off the contract any time during the validity of the contract by placing buy order for the contract initially sold

24 On clicking Square Off, on the Open Positions (previous) page, you would land on the following page, where you need to fill the specifications of the square-off order In our example, we had initially bought the call option at premium of Rs 80, and we are now placing a square off order ( SELL in this case) at premium of Rs 90 After filling the details, click Submit to proceed for order confirmation After order confirmation, you can visit the order book by clicking Order Book, where now you can see the details of the original as well as the squared-off order and their status

25 Cash Projection For F&O Click Cash Projections' The page would then give the details of the debits or credits made into your account, towards the daily settlements carried out.

26 Portfolio Details For F&O On the Portfolio Details page, you can view the details of the transactions that are already in your portfolio details, along with the exchange and the product It also shows you the profit/loss, whether unrealized or realized of all contracts that are traded in your account for the duration selected by you. Select the Product and click on View To view the details of the contracts, click View Details

27 Research Products for F&O Daily Derivatives, Weekly Derivatives, Roll over Monitor, ICLICK-2-GAIN*, etc. (* ICLICK-2-GAIN is currently for UAE, Bahrain and Oman)

28 Taxation for NRI -F&O Derivatives income for NRIs is treated as profit/loss from business income Applicable taxes will be deducted at source for transactions entered into through Intra-month set-off between profits and losses for deduction of taxes TDS is blocked during the calendar month on the cumulative net profit on the derivatives portfolio The cumulative net profit is derived as: Futures Profit/Loss on square off End-of-Day (EOD) Mark-to-market Profit/Loss Options Premium receivable on writing of option contracts Premium payable on buying of option contracts Profit on exercise Loss on assignment Profit/Loss on square off Brokerage, Service Tax, Securities Transaction Tax, Transaction Charges, SEBI Turnover Charges and Stamp Duty are treated as cash outflow and deducted from profits achieved to arrive at net cumulative profit for calculation of TDS.

29 Taxation for NRI -F&O The blocked TDS amount can be seen on the page: F&O Limit Page > Usage of Limit > Group ID 9. TDS is nil if there is a cumulative net loss. The tax amount is uncrystallized/blocked during the month as it can change on account of profit/loss on further transactions.

30 Taxation for NRI -F&O The TDS amount is crystallized / pay-in is done at the end of the month. The crystallised TDS amount can be seen on the page: F&O > Cash Projections page > NRI's TDS Projection link.

31 To know more about NRI F&O (account opening / registration for F&O, trading, settlement, taxation, brokerage charges etc) Please visit our FAQ section at our website using the following path: FAQ's (Customer Service section)--> NRI FAQ---> NRI FAQ (Derivatives Futures & Options)

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33 Disclaimer: The contents mentioned herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. While due care has been taken in preparing this Demo, I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any inaccurate, delayed or incomplete information nor for any actions taken in reliance thereon. The contents herein above are not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject I-Sec and affiliates to any registration or licensing requirement within such jurisdiction. Kindly read the Risk Disclosure Documents as prescribed by the regulators /exchanges carefully before investing.