Educational guide
Futures & Options in India — Contract Mechanics, Margins & Lot Sizes
F&O is a leveraged contract market — the same ₹1 lakh of margin controls ₹8–10 lakh of underlying exposure. Risk amplifies symmetrically.
// contracts and lot sizes
Indian F&O trades in fixed lot sizes per underlying (e.g. NIFTY 50: 75 units, Bank NIFTY: 35, RELIANCE: 500). Contracts expire weekly (indices) or monthly (stocks).
// margin and leverage
SPAN margin covers the worst-case 1-day move on the position. Exposure margin is an additional buffer. Total margin requirement is 10–18% of contract value. Leverage = 1 / margin %, so ~6–10×.
// settlement
Index F&O is cash-settled. Stock F&O is physically settled — if you hold a long futures or ITM option into expiry, you must take delivery of the underlying shares (with full cash settlement).
// frequently asked questions
Long options have limited downside (premium paid) but high theta decay. Short options have unlimited downside risk despite the limited premium received. Neither is universally 'safer'.