F&O Education

What Can We Use to Learn Futures & Options?

In my opinion, learning F&O should not start with the question—

This is where most people start making their first mistake.

They open YouTube and search for—

Then they find a Strategy.

It works for a few days, and when the Market Behaviour changes, the same Strategy starts giving losses.

Then they search for another Strategy.

Then a third one.

And slowly, instead of learning Trading, a person starts collecting Strategies.

Whether it is F&O or Cash, I always look at learning Trading in a different way, and I prepare my Students accordingly.

1. First, Understand the Instrument

Before thinking about strategies, the first step should be understanding what you are actually trading.

• What is a Future?
• What is an Option?
• What is the difference between a Call and a Put?
• Why does the Premium change?
• What is the impact of Expiry?
• How does Margin work?

2. Learn the Option Chain

After this, there is one thing that Beginners often ignore—

Just looking at OI and saying, “There is Resistance here,” does not mean you understand the Option Chain.

Rather, you need to understand:

• Where is OI increasing?
• Where is it decreasing?
• What is the combination of Price and OI telling us?
• Where are Call and Put Writers active?
• Is that Position actually moving the Market or is it just visible on the screen?

3. Price Action & Technical Analysis

After this comes Price Action and Technical Analysis.

Because an Option's Premium does not move only according to your Prediction.

All of these have an equal impact.

4. Understand the Greeks

Once you understand all this, the next thing that comes is—

A lot of people simply memorize Delta, Theta, Vega and Gamma like Exam Definitions.

But the real question is—

Many times, the answer is Theta.

Sometimes the Premium becomes weak because Volatility falls.

Sometimes, even though your Direction is correct, the Move takes time to come.

That means in F&O, simply knowing whether the Market will go up or down is not enough.

You also need to understand:

• How much Move is required
• By when you need that Move
• How the Option Premium can behave during that Move

5. Risk Management

After understanding all this, the next thing comes—

You don't need any Strategy to learn this part.

You should know how to decide:

• How much Risk should you take in one Trade?
• Where will the Stop Loss be?
• What should be the Position Size?
• What will you do after 3 consecutive Losses?
• How much loss are you willing to let your Account take when you are wrong?

6. Trading Psychology

And there is one thing that perhaps the least number of people learn—

Because you have learned Futures, Options, Greeks and Option Chain.

But if you Double your Quantity after a Loss, then all your Knowledge becomes useless at that moment.

So, What Can You Use to Learn F&O?

So, in my opinion, to learn F&O, you should take the help of four things—

1. Good Books / Reliable Educational Material
2. Charts & Historical Data
3. Paper / Simulator Practice
4. Experience in the Real Market with Small Risk

Both SEBI and NSE have Structured Educational Resources available for Derivatives.

NSE's Current Derivatives Curriculum includes Topics such as Futures/Options Mechanics, Pricing, Greeks, Trading, Clearing-Settlement and Risk Management.