--- title: "What are futures and options (F&O kya hai) | RupeeCase" description: "A future is an exchange contract to buy or sell an index at a fixed price on a set expiry date, and both sides carry the full move." source_url: "https://www.rupeecase.com/learn/questions/what-are-futures-and-options" --- A bought call loses its premium below the strike and gains above the breakeven Profit and loss at expiry for one bought call on one lot of 65 units. The strike is at the money, the one nearest the future on the 30 Jun 2026 chain, and the premium is the settle price on 10 Jun 2026. Source: NSE end of day data, computed by RupeeCase. As of 10 Jun 2026. On 10 Jun 2026 the 30 Jun Nifty chain had a call at the money, the strike nearest the future. Its premium is the price of the right to buy the index at that strike until expiry. The chart shows what one bought call is worth at expiry, net of the premium, for one lot of 65 units. A future fixes a price at the start and settles on a set expiry date. If the index rises, the buyer gains and the seller loses by the same amount, point for point. The exchange settles those gains and losses in cash every day through mark to market, so no one carries an unpaid move for long. An option splits that promise in two. The buyer of a call has the right to buy at the strike, and the buyer of a put has the right to sell. The writer takes the other side of the obligation and collects the premium. Index options are European and cash settled, so they are exercised only at expiry, and the payout is the gap between the expiry value and the strike, if it is in the money. Two limits matter from the first trade. The buyer's loss stops at the premium paid, while the writer can lose far more than the premium collected. A lot is the fixed size of each contract, and for Nifty it was 65 units on 10 Jun 2026. The exchange sets the lot, not the trader. Read the payoff before the premium. The question on [buying against selling](/learn/questions/option-buying-vs-selling) uses the same chart on a pair of options. **Before you trade.** Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. [Read the SEBI study](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html) What are futures and options (F&O kya hai)?A future is an exchange contract to buy or sell an index at a fixed price on a set expiry date, and both sides carry the full move. An option gives the buyer the right, not the duty, to buy the index with a call or sell it with a put at a strike price until expiry, and the buyer pays the premium up front for that right. LGo deeper ## Where Learn teaches this. [Go deeperWhy derivatives exist: forwards, futures and options in one story8 min, Beginner](/learn/path-12/module-12-1-why-derivatives-exist)[Go deeperFutures explained: long, short, leverage and daily mark to market8 min, Beginner](/learn/path-13/module-13-1-futures-basics-mark-to-market)[Go deeperThe call option, told as a story8 min, Beginner](/learn/path-14/module-14-1-call-option-explained)[Module 6.6Derivatives, Futures and Options for the Systematic Investor9 min, Path 06](/learn/path-6/module-6-6-derivatives-futures-options)[Try itPayoff builderLegs from a dated chain, the expiry and before expiry curves, breakevens and the charges.](/learn/tools/payoff-builder) SSources ## Go to the source. 3 sources, SEBI the most cited The publisher of each source listed below. Source: Module undefined source list. 1. [NSE, equity derivatives contract specifications (instruments, trading cycle and expiry day)](https://www.nseindia.com/static/products-services/equity-derivatives-contract-specifications) NSE 2. [SEBI investor education, Understanding derivatives](https://investor.sebi.gov.in/understanding_derivatives.html) SEBI 3. [SEBI master circular for stock exchanges and clearing corporations (30 Dec 2024), chapter 5: index futures and options are settled in rupees](https://www.sebi.gov.in/legal/master-circulars/dec-2024/master-circular-for-stock-exchanges-and-clearing-corporations_90353.html) SEBI ?Questions people ask ## Related questions. [QuestionOption buying or option selling: which is better?Beginner, trap check](/learn/questions/option-buying-vs-selling)[QuestionHow much capital do I need to trade or sell options?Beginner, trap check](/learn/questions/capital-needed-for-options)[QuestionFutures or options: which suits a beginner?Beginner](/learn/questions/futures-or-options-for-beginners)[QuestionCan an option buyer lose more than the premium, and can I hold options to expiry?Beginner](/learn/questions/can-option-buyer-lose-more) [All 130 questions](/learn/questions/) Explore next ## Go deeper on this question. * [QuestionWhat is STT on options and on exercise?A short answer with a dated chart](/learn/questions/stt-on-options) * [GlossaryInvesting glossary, 230 termsPlain word definitions, and the app’s own](/learn/glossary) * [Free module 12.1Why derivatives exist: forwards, futures and options in one story8 min read](/learn/path-12/module-12-1-why-derivatives-exist) * [QuestionOption buying or option selling: which is better?A short answer with a dated chart](/learn/questions/option-buying-vs-selling) * [Free module 13.1Futures explained: long, short, leverage and daily mark to market8 min read](/learn/path-13/module-13-1-futures-basics-mark-to-market) * [Free module 14.1The call option, told as a story8 min read](/learn/path-14/module-14-1-call-option-explained) Community ## Join my WhatsApp group. 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