FNO Full Form in The Share Market

What is the full form of FNO in the Share Market?

FNO full form in share market is Futures and Options. FNO is an important type of stock market derivatives that are used for trading in the share market. FNO is indeed a contract that has been signed between two parties for trading at a predetermined cost. The importance of such contracts is that they tend to hedge the market risks as they lock the price of the stock in advance. Future and Options derive their price from an underlying asset such as stock market indices, commodities, shares, ETFs, etc.

Types of Futures and Options

Future contracts are the same for both the buyers and sellers in a contract, where options derivative is classified into two different types. The first type is the individuals who are entering the options contract to sell an asset at a predefined price at a future date. The second type is the individuals aiming to purchase an asset in the future and enter the call option to lock in the price for future trading.

Who should indulge in FNO trading?

FNO trading has tremendous profit potential, but it also involves certain risks. This type of trading is, however, beneficial for hedgers, who do not want to take trading risks due to price variations of a certain asset; for speculators, who invest in securities to benefit from price fluctuations; and for arbitrageurs, who wish to make profits from the differences in the asset price owing to market conditions.