Futures and options trading can be a powerful way to enhance your investment portfolio, offering opportunities for significant profits and effective hedging strategies. Angel Broking, one of India’s leading stockbrokers, provides a user-friendly platform to engage in these types of trades. This article aims to guide you through the process of trading futures and options with Angel Broking, explaining the basics, benefits, and step-by-step procedures.
See Also: How to Buy Futures on the Angel Broking App: A Step-by-Step Guide
Understanding Futures and Options
What are Futures?
Futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price. These contracts are standardized agreements traded on exchanges.
What are Options?
Options are financial derivatives that give the buyer the right, but not the obligation, to buy (call option) or sell (put option) an asset at a specified price within a specific time period. Unlike futures, options provide more flexibility to the trader.
Differences Between Futures and Options
Obligation vs. Right: In futures, both parties are obliged to fulfill the contract. In options, the buyer has the right but not the obligation to execute the contract.
Risk and Reward: Futures can result in unlimited profit or loss, whereas options limit the loss to the premium paid.
Usage: Futures are often used for hedging and speculation, while options are primarily used for hedging, speculation, and generating income.
Benefits of Trading Futures and Options
Leverage
Futures and options allow you to control a large position with a relatively small amount of capital, known as margin. This leverage can magnify your returns.
Hedging
These instruments can be used to hedge against potential losses in other investments. For instance, if you own a portfolio of stocks, you can use options to protect against a market downturn.
Liquidity
Both futures and options markets are highly liquid, allowing for easy entry and exit from positions.
Flexibility
Options, in particular, offer various strategies that can be tailored to different market conditions and investment goals.
Getting Started with Angel Broking
Open an Account
To trade futures and options with Angel Broking, you first need to open a trading account. Here are the steps:
Visit the Angel Broking Website: Go to the official Angel Broking website and click on “Open an Account.”
Fill Out the Application Form: Provide your personal details, such as name, address, and contact information.
Submit KYC Documents: Upload the required Know Your Customer (KYC) documents, including a government-issued ID, address proof, and a recent photograph.
Complete the In-Person Verification (IPV): This step involves verifying your identity either online or at a local branch.
Sign the Agreement: Read and sign the client agreement form.
Activate Your Account
After submitting the required documents and completing the IPV, your account will be activated. You will receive your login credentials via email.
Navigating the Angel Broking Platform
User Interface
Angel Broking offers an intuitive and user-friendly trading platform. Here’s a brief overview:
Dashboard: The dashboard provides a snapshot of your portfolio, including your holdings, available balance, and market updates.
Market Watch: This feature allows you to track real-time prices of various securities, including futures and options.
Order Book: Here, you can view all your active and completed orders.
Reports: Access detailed reports on your trading activity, margin requirements, and profit & loss statements.
Funding Your Account
Before you can start trading, you need to fund your account. This can be done through various methods:
Bank Transfer: Transfer funds directly from your bank account.
UPI: Use UPI for instant fund transfers.
Net Banking: Use net banking services for a seamless transfer of funds.
Cheque Deposit: Deposit a cheque at any Angel Broking branch.
Trading Futures in Angel Broking
Placing a Trade
Log In to Your Account: Use your credentials to log in to the Angel Broking platform.
Navigate to Market Watch: Add the futures contracts you are interested in to your market watch list.
Select the Contract: Click on the futures contract you wish to trade.
Place an Order: Choose between buying or selling the contract. Enter the number of lots you want to trade and the price at which you wish to execute the trade.
Review and Confirm: Double-check the details of your order and confirm the trade.
Managing Your Trades
Once you have placed a trade, you can manage it through the order book. Here you can:
Modify Orders: Change the quantity or price of an active order.
Cancel Orders: Cancel an unexecuted order if you change your mind.
Track Positions: Monitor your open positions and their performance.
Understanding Margin Requirements
Trading futures requires maintaining a margin, which is a percentage of the contract’s value that must be deposited as collateral. The margin requirements can vary based on the volatility and the exchange’s regulations.
Using Stop-Loss Orders
To manage risk, you can set stop-loss orders. These orders automatically close your position if the market moves against you by a specified amount.
Trading Options in Angel Broking
Placing an Options Trade
Log In to Your Account: Access the Angel Broking platform using your credentials.
Navigate to Market Watch: Add the options contracts you are interested in to your market watch list.
Select the Contract: Click on the call or put option you wish to trade.
Place an Order: Choose to buy or sell the option. Enter the number of lots and the premium price at which you want to trade.
Review and Confirm: Verify the order details and confirm the trade.
Strategies for Trading Options
Options trading can be complex, but several strategies can help you manage risk and maximize returns:
Covered Call: Selling a call option while owning the underlying asset.
Protective Put: Buying a put option to hedge against a decline in the underlying asset’s price.
Straddle: Buying both a call and a put option at the same strike price, betting on volatility.
Spread: Combining multiple options contracts to limit risk and reward.
Managing Options Positions
As with futures, you can manage your options trades through the order book. Key actions include:
Modify Orders: Adjust the terms of an active order.
Cancel Orders: Cancel pending orders if needed.
Track Positions: Keep an eye on your open options positions and their performance.
Risk Management
Diversification
One of the fundamental principles of risk management is diversification. Avoid putting all your capital into a single trade or asset class.
Use of Stop-Loss Orders
Always use stop-loss orders to protect your capital. These orders help you limit losses by automatically closing a position at a predetermined price.
Stay Informed
Keep yourself updated with market news and trends. Angel Broking provides various resources, including research reports and market analysis, to help you make informed decisions.
Regular Review
Periodically review your trading strategies and performance. Adjust your approach based on what works and what doesn’t.
Educational Resources
Angel Broking offers a wealth of educational resources to help you become a better trader:
Webinars and Seminars: Participate in live sessions conducted by market experts.
E-books and Guides: Access a library of downloadable content covering various aspects of trading.
Blog and Articles: Read informative articles on market trends, trading strategies, and investment tips.
Customer Support
Angel Broking provides robust customer support to assist you with any queries or issues:
Live Chat: Get instant help through the live chat feature on the website.
Email Support: Reach out via email for detailed assistance.
Phone Support: Call the customer care number for immediate support.
Branch Support: Visit a local branch for in-person assistance.
Advanced Trading Tools
Angel iTrade Prime
Angel iTrade Prime is an advanced trading platform that offers several features:
Lower Brokerage: Enjoy competitive brokerage rates.
Advanced Charts: Utilize detailed charts for technical analysis.
SmartAPI: Access API-based trading for automated strategies.
Angel SpeedPro
Angel SpeedPro is a desktop-based trading platform offering:
High-Speed Trading: Execute trades quickly and efficiently.
Comprehensive Tools: Use various trading tools and analytics.
Customization: Customize the interface to suit your trading style.
Conclusion
Trading futures and options in Angel Broking can be a rewarding venture if done correctly. By understanding the basics, leveraging the platform’s features, and employing effective risk management strategies, you can enhance your trading success. Remember to continuously educate yourself and stay informed about market trends to make the most of your trading journey with Angel Broking.
