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Derivatives Trading

Derivatives Trading – Is the Risk Worth the Gain?

The world of derivatives trading, encompassing futures and options, has captured the imagination of countless retail traders in recent years. But as enticing as the potential for quick profits may appear, the reality of derivatives trading is a complex web of opportunities, challenges, and substantial risks. This blog delves deep into the reasons behind the …

The Dark cloud of Futures & Options trading

Retail investors of late have been active in Futures and Options (F&O) trading. F&O average daily turnover has increased 34.5 times over the last 5 years (from Rs. 9.59 trillion to Rs. 331.2 trillion), but cash volumes have barely doubled (from Rs. 0.35 trillion to Rs. 0.73 trillion). First and foremost, what is this F&O segment? Similar …

Why are retail investors safer if they stay away from derivatives?

The Securities and Exchange Board of India (SEBI), India’s capital markets regulator, is clearly concerned about the high level of retail investors’ involvement with equities market derivatives. It may be noted that far too many people have just entered the F&O (Futures & Options) game, and it is highly unlikely that they completely understand the risks that …

An easily relatable example of Base rate fallacy:

In a Base rate fallacy, people prefer to disregard statistical and other commonly accepted facts in favour of merely fresh or recent information that they have been presented with. Consider these two examples – In one example, a Finfluencer, appears in front of a nice high-end luxury car and claims that everyone can make money and …