Scenario-based question regarding Stock Futures

[chitwanjit]

Hi to all members of TJ.

My Queries could be very basic to many members here, But their answer would help me immensely.

I have read amny articles about Futures trading. But still there are few questions which have not been answered from them. I wish to get an answer from members here.

I want to take example of Unitech.

Lets say lot size is 2000 shares of unitech. Today, the Unitech closes at 86.55.

Q1 : at what price I can buy it ?? Some of my friends say, it is around 10% of the actual value of the share ? is it true ??

Lets say tomorrow I buy one lot (2000 shares) of unitech at 87.00 . Now if tomorrow.

Q2: If Tomorrow unitech closes at 89.00 , would any amount ( i.e. 2000 * 89 - 87 = Rs 4000 ) be credited to my account or Just my position would show in positive, without any addition to my account ??

Q3: On the other hand, If tomorrow unitech closes at 85.00 , in that case Do i have to pay any amount, or just I should have the deficit (i.e. 2000 * (87.00 - 85.00) = 4000) , in my account ??


Q4 : From your personal experiences, how much risk is involved in Futures as compared to Options ??

Q5: Can I start Future trading with 20,000 Rs ?? Would it be decent amount enough to generate reasonable profit after a month??

Q6: Based on your experiences, which shares have best potential for Future trading ??

Q7: Any theory reading you would suggest, before trading futures??

Q8: Any precautions to be taken in Future trading ??

 

[think before]

dear friend,
if u have enough money to maintain mark to market span margin then future trading is good for u to expect profits.

*unitech lot size is 4000
-think before

 

[SavantGarde]

Hi Chitwanjit,

Please Check Below Each Query For Reply

Hi to all members of TJ.

My Queries could be very basic to many members here, But their answer would help me immensely.

I have read amny articles about Futures trading. But still there are few questions which have not been answered from them. I wish to get an answer from members here.

I want to take example of Unitech.

Lets say lot size is 2000 shares of unitech. Today, the Unitech closes at 86.55.

Q1 : at what price I can buy it ?? Some of my friends say, it is around 10% of the actual value of the share ? is it true ??

A1: If It Is 10% Of The Actual Value...Does It Mean It Has A Upside of 90%..??
Please Stop Listening To Your Friends.

Lets say tomorrow I buy one lot (2000 shares) of unitech at 87.00 . Now if tomorrow.

Q2: If Tomorrow unitech closes at 89.00 , would any amount ( i.e. 2000 * 89 - 87 = Rs 4000 ) be credited to my account or Just my position would show in positive, without any addition to my account ??

A2: If You HOLD Position In Futures Your Ledger Will Reflect The Change On A Daily Basis From The Previous Days Close Till You Square Off Your Position

Q3: On the other hand, If tomorrow unitech closes at 85.00 , in that case Do i have to pay any amount, or just I should have the deficit (i.e. 2000 * (87.00 - 85.00) = 4000) , in my account ??

A3: It Is Prudent To Maintain A Sufficient Ledger Balance At All Times If Trading In Futures....Because During Extremely Volatile Times...Your Position Can Be Liquidated Even Without A Call From Your Broker.

Q4 : From your personal experiences, how much risk is involved in Futures as compared to Options ??

A4: In Futures The Risk Is 100% At All Times & Options The Risk Is Limited To The Premium Paid For A Contract Considering You Are Buying The Option Contract.

Q5: Can I start Future trading with 20,000 Rs ?? Would it be decent amount enough to generate reasonable profit after a month??

A5: Short Answer Is NO

Q6: Based on your experiences, which shares have best potential for Future trading ??

A6: It Is Very Subjective

Q7: Any theory reading you would suggest, before trading futures??

A7: Once You Have Finished Reading All That Is Recommended, You Will Go Through Considerable Amount Of Time Un-Learning That You Have Read.

Q8: Any precautions to be taken in Future trading ??

A8: Alert Enough To See That You Still Have Clothes On...

Happy & Safer Trading

SavantGarde

 

[chitwanjit]

Dear Savant Garde,

From the time till I posted to the time I received response, I did unlearn many things as you said. I agree with your answers.


In continuation to my earlier query:

On most articles, I have read people saying, Never trust Future Calls and Intraday Calls available on the market. They recommend people to do their own analysis. In such a case, A full-time professional cannot get any time to analyse, and thus Does it mean he should stay away from stock Futures, Options Etc and deal only on delivery,

OR

Should we seek premium calls from the Service Providers? I have baktested their calls. They have 90-95% success with Stop Loss.

Also, Suggest some light as to how much amount should be considered as starter to Futures ??

Thanks in advance to all readers and posters.