'Never doing FnO again': Redditor loses Rs 1.98 Lakhs in Futures and Options trading, sparks debate on risk vs. reward
"That's it. Never doing FnO again," declares a Redditor, reeling from a massive loss of Rs 1.98 lakhs. This bold statement sparked a discussion on Futures and Options (F&O/ FnO) trading, with users debating whether the potential profits justify the high risks involved.
On Reddit (r/IndianStreetBets), a user posted a screenshot of their portfolio showing a loss of Rs 1.98 lakhs and vouched to never do it again.
That's it. Never doing FnO again.
byu/Freed-Neatzsche inIndianStreetBets
For the unversed, Futures are contracts to buy or sell an asset at a predetermined price on a specific future date. They are legally binding, meaning both parties must complete the transaction at maturity.
On the other hand, Options are contracts that give the holder the right, but not the obligation, to buy or sell an asset at a specified price before or on a certain date.??
In the comments, users weighed in on the risks of F&O trading.?
Some criticised the individual's trading approach, saying, "What was your logic behind being so bullish today that you bought calls of different strike prices??? The overall market sentiments are not that positive. I feel that it's so stupid for people to be so speculative that you would buy options at this point. You could've bought futures, keep paying your margins for small gains if your view was positive."
Another questioned, "Why so bullish with Israel -Iran tension at all time high plus Hindenburg dirt on SEBI chair? Even if you not bearish you shouldn't be touching CE for now."
One advised on resisting the urge to chase losses, saying, "You're gonna feel like you need to get back what you lost, but trust me, if you do, you'll just end up losing even more. Been there, done that. Do whatever it takes, but for your own good, quit FnOs for good."
Is F&O trading very risky?
While F&O trading can be profitable, but it involves significant risk due to the potential for large price swing.
It involves using leverage, which means you don't need to pay the full cost of trading upfront. Instead, you can control large amounts of assets with a relatively small investment. However, this also means there's a higher risk of significant losses.
Additionally, options have expiration dates, so if they don't perform as expected, you can lose the entire amount you paid for them.?
Further, as with all trading, market conditions can change quickly, and the emotional stress of rapid price shifts can lead to hasty, high-risk decisions.
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