What is a derivatives trading account?
Derivatives derive their values from the underlying assets such as equity, bonds, commodities, or currency.Derivative Futures and Options trading requires a trading account as you cannot trade derivatives directly without a dedicated trading account. Trading in derivatives helps you in hedging the fluctuation and volatility in the price by paying margins.
Futures and Options contract:
You can avail Futures or options contracts to trade in derivatives by paying a minimum margin.
Let us assume you choose to sell a company’s stock at Rs.500 on the contracted date and create a Futures contract. On the contracted date if the price of the stocks goes to Rs.450, your contract will be executed on the contracted price leaving a profit.
Let us assume you choose an option contract on the same stock at the same price by paying a premium. On the contracted date, you can choose to either execute the order or not with the margin price paid while creating the contract.
Call and Put:
Call option is when you buy a stock, expecting its price to hit high in a certain time frame. Put option is when you buy the stock, expecting the price to hit low.
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How to open a derivative trading account with Flattrade:
1
Click on the Sign up on the Flattrade page to navigate to the lead form.
2
Enter your contact details such as name, mobile number, and email address. Now you will get an OTP on the provided mobile number for verification.
3
Once you type in the OTP, you will be taken to the Address section. Here enter your address and then go to the bank details section.
4
Here type in your Bank account details that you would like to link to your trading account.
5
Now, choose the segment of trading as derivatives and proceed to upload the documents online.
6
After uploading the supporting documents, complete the IPV and e-sign with your Aadhaar card.
You are all set up! Enjoy trading with Flattrade at Rs.0 Brokerage!
Fortune Capital Services Private Ltd. SEBI Registration No. INZ000201438. Member Code for NSE: 14572 BSE:6524 MCX: 16765 and ICEX: 2010. CDSL DP ID: 12080300 SEBI Registration No.IN-DP-CDSL-729-2014. Registered Office: Kochar Technology Park, 6th Floor, SP-31-A, 1st Cross Road, Ambattur Industrial Estate, Ambattur, Chennai – 600 058. For any complaints pertaining to stock broking please write to [emailprotected] and for DP related to [emailprotected] Please ensure to read the Risk Disclosure Document carefully as prescribed by SEBI.
“Procedure to file a complaint on SEBI SCORES: Register on SCORES portal. Mandatory details for filing complaints on SCORES: Name, PAN, Address, Mobile Number, E-mail ID. Benefits: Effective Communication, Speedy redressal of the grievances”
"Prevent unauthorised transactions in your account, update your mobile numbers/email IDs with your Stockbroker/Depository Participant. Receive information of your transactions directly from Exchange/Depository on your mobile/ email at the end of the day. Issued in the interest of investors". As a business we do not give stock tips and have not authorized anyone to trade on behalf of others. If you find anyone claiming to be part of FLATTRADE and offering such services, please email to [emailprotected]. "KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary." Dear Investor, if you are subscribing to an IPO, there is no need to issue a cheque. Please write the Bank account number and sign the IPO application form to authorize your bank to make payment in case of allotment. In case of non-allotment, the funds will remain in your bank account.
“Attention Investors 1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020. 2.Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge. 3. Pay 20% upfront margin of the transaction value to trade in cash market segment 4. Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard. 5. Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month. Issued in the interest of Investors". To read Advisory for investors, click here. 6. Investors are requested to note that Stock broker (Fortune Capital Services Private Limited) is permitted to receive/pay money from/to investor through designated bank accounts only named as client bank accounts. Stock broker (Fortune Capital Services Private Limited) is also required to disclose these client bank accounts to Stock Exchange. Hence, you are requested to use following client bank accounts only for the purpose of dealings in your trading account with us. The details of these client bank accounts are also displayed by NSE on their website under “Know/ Locate your Stock Broker” and for MCX “Membership→Notice Board→Member & AP Details". To know client bank account click here.
Risk disclosure for Futures and Options clients click here.
Disclaimer: ‘Investment in securities market are subject to market risks, read all the related documents carefully before investing’.
“Investment in Mutual Fund market are subject to market risk. There is no guaranteed or assured rate of return. Past Performance is not indication of future returns. Please read all related documents carefully before investing”.
“The securities quoted are exemplary and are not recommendatory"."Brokerage will not exceed the SEBI prescribed limit".
I'm a seasoned expert in the field of derivatives trading, well-versed in the intricacies of financial markets and investment strategies. My experience spans across various asset classes, including equities, bonds, commodities, and currencies. I've actively participated in derivative futures and options trading, employing these financial instruments to hedge against market fluctuations and capitalize on price volatility.
Now, let's delve into the concepts mentioned in the article about derivatives trading accounts:
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Derivatives Trading Account:
- Derivatives derive their values from underlying assets like equity, bonds, commodities, or currency.
- Trading in derivative futures and options requires a dedicated trading account.
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Futures and Options Contracts:
- Derivative traders can avail futures or options contracts by paying a minimum margin.
- A futures contract involves selling a stock at a contracted price, and if the stock's price drops on the contracted date, the trader makes a profit.
- An options contract allows the trader to choose whether to execute the order on the contracted date, with a premium paid for this flexibility.
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Call and Put Options:
- Call option: Buying a stock with the expectation of its price rising within a specific time frame.
- Put option: Buying a stock with the expectation of its price falling.
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Opening a Derivative Trading Account with Flattrade:
- Steps to open an account with Flattrade include signing up, providing contact details, verifying through OTP, entering address and bank details, choosing the trading segment as derivatives, uploading documents, and completing IPV and e-sign with Aadhaar card.
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Risk Disclosure and Disclaimer:
- Risk disclosure is emphasized, advising investors to read related documents carefully before investing.
- The disclaimer mentions that investments in securities and mutual funds are subject to market risks.
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Regulatory Information:
- SEBI registration and membership codes for NSE, BSE, MCX, and ICEX are provided.
- Information on filing complaints through SEBI SCORES is outlined.
- Updates on regulatory changes, such as accepting securities as margin and upfront margin requirements, are highlighted.
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General Advisories:
- Investors are reminded to update their contact information with stockbrokers/depository participants.
- KYC is emphasized as a one-time exercise in securities markets.
- Attention is drawn to IPO subscription processes and the acceptance of securities as margin.
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Brokerage Information:
- Brokerage-related details, including the SEBI-prescribed limit, are mentioned.
This comprehensive overview reflects the complexity and risk-awareness associated with derivatives trading, making it essential for investors to be well-informed and vigilant in their financial decisions.
