Futures and options (F&O) are derivative products in the stock market. Since they derive their values from an underlying asset, like shares or commodities, they are called derivatives. Two parties enter a derivative contract where they agree to buy or sell the underlying asset at an agreed price on a fixed date.

F&O can be an important tool for investors and traders looking to manage risk, leverage capital, and speculate on market movements. They are also more cost effective because traders can participate with lower unforeseen costs for an asset outright.