{"id":3173,"date":"2022-02-18T09:02:59","date_gmt":"2022-02-18T09:02:59","guid":{"rendered":"https:\/\/www.paytmmoney.com\/blog\/?p=3173"},"modified":"2022-02-18T14:04:56","modified_gmt":"2022-02-18T14:04:56","slug":"what-does-the-future-hold-for-you","status":"publish","type":"post","link":"https:\/\/www.paytmmoney.com\/blog\/what-does-the-future-hold-for-you\/","title":{"rendered":"What Does The \u2018Future\u2019 Hold For You? Comparing Index & Stock-based Futures"},"content":{"rendered":"

Whenever it comes to investment of all sorts, we carve out a futuristic plan. The plan primarily entails <\/span>capital allocation<\/span><\/a> for bringing back good returns over a certain time period, be it for an opulent <\/span>future<\/span><\/i> or a secure <\/span>future<\/span><\/i>. We have always been keen on finding the outcome after shelling out our money.<\/span><\/p>\n

Narrowing down the investment universe to equity, we will delve deeper into the <\/span>future<\/span><\/i>. Sounds interesting? By <\/span>future<\/span><\/i> here, we mean Future Contracts which are a part of equity derivatives along with Options. However, we will focus only on Futures in this blog.<\/span><\/p>\n

\"nifty<\/p>\n

Futures are basically agreements between two parties for the purchase and delivery of an asset at an agreed upon price at a future date. A futures contract allows an investor to speculate on the direction of a security, commodity or a financial instrument.<\/span><\/p>\n

Futures and options are by far the most common equity derivatives. These two products are available on indices and stocks. Over 98% of futures and options contracts are index \u2013based (according to the turnover figures as on 17th Feb, 2022 post market hours).<\/span><\/p>\n

\"turnover<\/p>\n

Currently, there are 4 indices and nearly 200 individual stocks trading in the F&O segment offered by NSE. You must be wondering as to why we are so insistent on index-based derivatives rather than stocks even though the latter\u2019s count is far more.\u00a0<\/span><\/p>\n

We have enlisted a few more reasons as to why index futures are more beneficial than stock futures:<\/span><\/p>\n

\"why<\/p>\n