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What is a derivatives trading account?

Derivative (Futures & Options) trading involves buying or selling derivative products. The idea is to hedge portfolio risks and make substantial gains from price volatility by paying nominal margins. They are called derivatives because they derive their value from underlying assets like equity, bonds, currency or commodities. To trade in derivatives, you will need an options or futures trading account.

Why do you need a derivative (Futures & Options) trading account?

  • You cannot directly trade in derivatives without opening a derivatives account with a listed brokerage. Seasoned brokerage houses like Angel One, are trading and clearing members of NSE f&o segment, and BSE derivatives segment. These members provide a gateway to the exciting world of derivative market. Currently, your equity trading account doubles up as a futures (and options) trading account.
  • When there is significant exposure in the underlying asset class, you need this type of account to hedge against market volatility.
  • Given that the margins are nominal, you can afford to take calculated risks in futures trading with the help of a derivative trading account.
  • Trading in derivatives allows one to hold the position for longer (as long as three months).
  • A derivative trading account with Angel One comes with these benefits:
  1. Pan India Presence: You can trade from anywhere; geography is not a barrier anymore to open an options and futures trading account.
  2. Easy Access: You can access your account online as well as offline.
  3. Regular Updates: You can get alerts like new schemes and offers. Angel One also sends curated tips based on your trading pattern.
  4. In-Depth Research: Not just executing the trades, but the brokerage also provides the right tools to pick the right product. These tools are based on your financial requirement, along with related in-depth market research and analyst inputs.
  5. 24/7 Customer Support: There is dedicated customer help desk along with a web-enabled 24/7 back end to help you navigate the world of derivatives trading.
  6. Seamless Processes: An options and futures trading account with Angel One takes very little time to open. Moreover, with the help of online access and smart technology, investors need not maintain paper receipts for trade transactions.
How to open a derivative trading account
To begin an f&o account, you’ll have to submit a ‘Client Registration Form’ along with other SEBI mandated documents. As you may already know, SEBI is the regulator for the securities market in India. Documents include an account opening form and relevant Know Your Client (KYC) verification proofs. Here’s a list for reference:
STEP - 1
Fill form for Opening Demat Account

Account Opening Form.

STEP - 2
Submit proof of address and residence

Photo ID proof:
PAN card/Voter's ID/Passport/Driving license/Aadhaar card.

STEP - 3
Complete Mobile Verification for Opening Demat Account

Address proof can be any one of these:
Telephone bill/Electricity bill/Bank statement/Ration card/ Passport/Voter's ID/Registered lease or sale agreement/Driving license.

STEP - 4
Provide KYC Details to Open Demat Account

Financial proof:
Apart from a bank statement, you can provide any of the following: (Copy of ITR Acknowledgement , Annual Accounts, Form 16 in case of salary income, Net worth certificate, Salary Slip, Demat account Holding statement)

Your verification process will take place through a phone call or an in-house visit. After this, your options and futures trading account is set up, and you’ll receive your account details.

How can one check the account opening status?

You can check your account opening status by logging into Angel One website. Follow these steps:

  • Go to: https://www.angelone.in
  • Go to the Home Page
  • Click on Track A/C Opening Status
  • Enter the pan card details in the given column and click on the ‘Submit’ tab to get the status.

How to trade after opening a derivative trading account?

You can trade using our online or mobile platform. You can even transact offline by calling our tele-broking services.

What is an options and futures contract?

Though both futures and options are derivatives of underlying asset classes, they’re different. The primary one being, an option is a right (and NOT an obligation) to buy or sell an underlying asset, at pre-determined prices. A futures contract, on the other hand, is an obligation on the part of buyers and sellers to execute the trade at pre-decided prices on the date mutually agreed.

Example of futures trading

For instance, you buy one-month equity contracts of ABC Company with your futures account at Rs.400 per share. On the contract expiry date, if the share price goes up to Rs. 450, you end up making a decent profit.

What is an options and futures contract?

Though both futures and options are derivatives of underlying asset classes, they’re different. The primary one being, an option is a right (and NOT an obligation) to buy or sell an underlying asset, at pre-determined prices. A futures contract, on the other hand, is an obligation on the part of buyers and sellers to execute the trade at pre-decided prices on the date mutually agreed.

Example of futures trading

For instance, you buy one-month equity contracts of ABC Company with your futures account at Rs.400 per share. On the contract expiry date, if the share price goes up to Rs. 450, you end up making a decent profit.

CURRENCY AND FOREX TRADING

Derivative FAQs

Is it mandatory to submit the financial proof to open derivative account segment?

Yes. It is mandatory to provide valid financial proof to open any derivative segment account.

What are the optional documents that can be taken as financial proof?

Apart from a bank statement, you can use any of the following documents as valid financial proof:

  • Copy of ITR Acknowledgement (for last financial year)
  • Copy of Annual Accounts (for last financial year)
  • Copy of Form 16 in case of salary income (for last financial year)
  • Net worth certificate (latest one, or at the end of last financial year)
  • Salary Slip (for one month in current financial year)
  • Copy of Demat account Holding statement (not more than 3 months old)

I am staying in a rented flat. Can the rent agreement be valid as my permanent address?

No, the address of a rented house cannot be considered as a valid permanent address but can be accepted as a correspondence address proof.

How can I check my account opening status "online" through your website?

You can check your account opening status through our website. Follow the given steps –https://www.angelone.in > Home Page > Track A/C Opening Status. Enter your Pan Card details in the given column and click on ‘Submit’ tab to get the status.

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