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How are Stocks Included in the F&O Segment?

1. What is futures and options segment?


Just as shares are bought or sold in the market, a derivative is also an instrument that is traded. Its value is derived from the underly ing asset. Futures and options are the two types of derivatives which are commonly traded.

2. What are the criteria for inclusion of securities in F&O?


For inclusion in F&O segment, a stock is chosen from among the top 500 stocks based on aver age daily market capitalisation and average daily traded value in the previous six months on a rolling basis. The stock's median quarter sigma-size (average of median buying and selling price) should not be less than Rs 10 lakh. The market-wide position limit in the stock should not be less than Rs 300 crore. If a stock fails to meet the eligibility criteria for three consecutive months, exchanges stop issuing fresh contracts on that security .

3. Can stocks be included again once they are excluded from F&O segment?

 Once a stock is excluded from the list of F&O securities, it will not be considered for re-inclusion for one year. For the re-inclusion to sion for one year. For the re-inclusion to happen, the security has to meet the eligibility requirements for three consecutive months.

4. Why have so many securities been added to F&O recently?


NSE announced addition of 15 securities to the F&O segment from April series. Following that, the exchange announced addition of 16 more securities from May series.The June series saw five more securities being added. This has brought the total number of securities in F&O segment to over 200. Derivative analysts said the sharp rally in the market, particularly in the mid and small-cap segment, have helped several stocks meet the criteria for inclusion in the F&O segment. While this is positive development as it gives opportunity to hedge, it may also expose these stocks to bigger price fluctuations in case of high market volatility






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