What Is F&O (Futures and Options)? | Sleeping Trade India

Futures

A futures contract is an agreement to buy or sell an underlying (like NIFTY or Reliance) at a set price on a set future date. Futures trade in lot sizes and require margin — a fraction of the contract value — deposited with your broker. Movement in the underlying magnifies into your margin.

Options

Options are rights, not obligations, to buy (call) or sell (put) the underlying at a set strike price, expiring on a set date. Buyers pay a premium; sellers receive it. Options are nonlinear — the payoff graph bends, making them powerful but also easier to get wrong.

Lot sizes and margins

SEBI has repeatedly adjusted lot sizes (most recently in 2024–25) to raise the minimum exposure per contract. NIFTY lot size is currently 75, Bank Nifty 30. These change over time. The practical effect is that F&O is not a ₹10,000 activity — it is a ₹1 lakh+ activity.

Risks

SEBI's 2025 study found 91% of retail F&O traders lose money. F&O is leveraged — a 2% move in the underlying can be a 20%+ move on your margin. Options can expire worthless. Stop losses can slip. The SEBI warning is not theoretical; it is the lived experience of 9 out of 10 participants.

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How Sleeping Trade approaches futures and options

Sleeping Trade trades NIFTY 50 and Bank Nifty F&O on behalf of users. We do not trade individual stock derivatives broadly, and we do not trade currency or commodity F&O.

If you are new to F&O, the safest on-ramp is to use a system from day one rather than learning by losing manually. The 91% loss rate is heavily front-loaded into the early years of manual trading.

Frequently Asked Questions

What underlyings does Sleeping Trade trade?

Primarily NIFTY 50 stocks and Nifty / Bank Nifty options. Higher tiers extend to FinNifty and selected single-stock F&O.

What is the minimum capital for F&O?

Lot sizes have risen — practical minimum is around ₹2 lakh deployed capital. Below that, position sizing becomes uneconomic.

Is F&O suitable for everyone?

No. Most retail traders should not trade F&O at all. SIPs and index funds are a more appropriate vehicle for most users.

Common F&O mistakes retail traders make

Mistake one: trading F&O without first understanding cash equity. F&O amplifies whatever you already do. If your equity intuitions are wrong, F&O will lose money faster.

Mistake two: treating F&O lot size as 'cheap exposure'. The leverage is the trap. A small move against you on a single lot can wipe out a meaningful percentage of capital at the wrong sizing.

Mistake three: holding losing options to expiry hoping for a miracle. Theta does not pause for hope. Most retail option buyers eventually learn this through expensive lessons; systematic exits avoid the lesson.

What Is F&O?