The main purpose of F&O is to hedge against the volatility of the stock market. F&O trades are for big players and should be used as hedging tools. Since, the F&O trades are not settled through actual delivery, this has turned this segment into speculative one. It is a highly leveraged and high risk segment of the share market.Retail investors should not participate such type of speculative activities. Why to involve yourself into a speculative activity. It is made for big players and are to be used for hedging purposes only. In our system, unfortunately, margin requirement is so low that an investor with Rs. 50,000/- can start trading in F& O space. He may earn initially some thing but eventually ends up with empty hands and broken hearts. He may earn in 9 out of 10 trades but one trade may wipe out all his earnings.
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