How to Make Your Living with Derivatives Trading?


Futures and Options (FnO) trading is a key part of the derivative market which has a high potential for making profits. Yet it also comes with substantial risks. You must have well-planned strategies and strict practices for managing risk if you want to be successful in F&O trading.

An FnO app is one such tool in this digital era which can provide live market information, enable easy transactions and implement better trading strategies. This article will show you how to make money from FnO trading with an emphasis on proper planning and the use of modern instruments such as apps.

Developing a Trading Strategy

To earn money from trading in Futures and Options, it is essential to have a good strategy, knowledge about the market and continuous learning. Given below are a few strategies as well as some tips:

1. Understanding Derivative Contracts

F&O trading makes use of derivative contracts which are futures and options. Futures agreements enable the purchase or sale of the underlying property at a price agreed upon in advance for delivery at a later date.

An options agreement provides the purchaser with the privilege, but not the duty, to trade an asset below or above its set value within a certain period.

It is important to comprehend these commitments if one hopes to succeed in F&O trading.

2. Creating Short Positions in Equity Futures

In a bear market, it is often profitable to sell futures because they can decline steeply. This is the strategy of creating short positions in stock futures contracts by selling them in anticipation that their prices will fall.

One should go with the trend until it changes but this method involves risks which are high and need good knowledge about trends in future trading.

3. Trading in Option Strategy and Option Spreads

Trading in option strategy and option spreads can be beneficial during high market volatility.

However, option writing is not advised in such scenarios, even if the option premium is high. This is because the higher implied volatility (IV) increases market risk.

Essentially, this strategy involves trading options based on market sentiment and volatility, aiming to profit from premium decay over time.

4. Protecting the Portfolio

Hedging is a strategy used in F&O trading to protect your portfolio from market volatility. It involves buying a Nifty Put or Bear Put Spread using monthly contracts or long-dated options.

This strategy helps to mitigate potential losses from unfavorable market movements. It’s crucial to understand your portfolio composition before implementing this strategy.

Remember, hedging doesn’t eliminate risk completely, but it can help manage it.

5. Choose A Reliable F&O Trading

To start F&O trading, you need a derivative trading account with a reliable platform to easily buy and sell futures and options contracts, monitor market trends, and manage your portfolio.


Futures and Options trading can be a viable source of income with the right strategies and risk management practices. However, it’s crucial to remember that continuous learning and staying abreast of market trends are key to success in this field.

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