F&O Stocks List NSE: On What Criteria Are They Selected?

There are great benefits of investing in F&O stocks. However, the Futures and Options derivatives are not available for all types of equities. This is where a well-researched F&O stock list comes into play. Note that there are about 175 securities on the F and O stock list directed by SEBI ( Securities and Exchange Board of India). Moreover, the eligibility criteria for getting placed on this list is also stipulated by SEBI. In this article, we will discuss everything you need to know about F&O stocks NSE along with an insightful F&O stocks list. Keep reading!

Eligibility Criteria For F&O Stocks List

Wondering what requirements a stock has to meet to be on the F&O stocks list stipulated by SEBI? Here is the eligibility criteria for the same:

• Stock must be selected from the top 500 stocks listed on NSE, in terms of daily market cap and average traded value of the past 6 months on a rolling basis. 
• The stock should not have a market-wide position limit below Rs. 500 crores. 
• The median quarter-sigma order size of the stock over the past 6 months should not be below Rs. 25 lakh. 

How to Get Started with F&O Stock Trading?

Just like the trading of shares takes place in the exchanges or cash market, the F and O stocks are also traded in stock exchanges like NSE (National Stock Exchange of India). This option was introduced in 2000 in the stock exchanges of India. To get started, all you need is a derivative trading account with a registered broker and you’re all set to take part in F and O trading. With this account, you can trade F&O stocks from anywhere in the world. 

List of F&O Stocks

Below is a list of FO stocks you can consider investing in:

(Above Data as of 7 November 2022)
(Stocks selected on the basis of those who have above-average applicable daily volatility as on 7 November 2022)

Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns

How to Select the Best F&O Stocks?

There are certain things that must be kept in mind at the time of choosing the best F&O stocks, those are as follows:

Make Sure to Select F&O Stocks With Higher Liquidity 

When investing in F&O stocks, investors are required to make quick decisions. And this is only possible when your selected F&O stocks have high liquidity. When a stock has ample liquidity, trading becomes much easier and safer. Even high volumes can be traded without exposing yourself to the market risks. On the other hand, stocks with low-liquidity can not be traded that easily. So, as a general rule of thumb, always choose an F and O stock that has experienced the trading of at least 3,000 contracts on a particular day. 

Select F&O Stocks With Higher Volatility 

Yes, you’ve read it right. You don’t need to fear market volatility when it comes to choosing stocks in the F&O segment. In fact, the best ones are those with higher volatility. There is absolutely no point of investing in stocks that are stagnant. The best part about these stocks is that you can make profits when the stock moves in any direction. Therefore, always select and invest in stocks that experience higher volatility. 

Avoid Selecting the F&O Stocks That Are Banned

Just like the SEBI-regulated F&O stock list, there is also an F&O ban list. The National Stock Exchange publishes this list on a day-to-day basis. It basically contains the stocks that are not suitable for trading. For instance, on April 21, 2022, Tata Power was on this ban list. You can easily check this list on the official platform of NSE and avoid the stocks that are placed on this list. 

Want to know why a stock enters the F&O ban list? The answer is based on two special parameters, aggregate Open Interest(OI) and Market Wide Position Limit (MWPL). A stock is named on the F&O ban list when its OI value exceeds 95% of the Market Wide Position Limit. Moreover, it will remain in this list until the aggregate open interest (OI) does not come down to 80% of the MWPL. In a nutshell, you can’t simply trade the stocks which are on the ban list, it is not permitted. 

Key Takeaways

F&O stock trading allows you to benefit from market volatility. With these stocks, you can earn profits even when the market trends go downwards. However, the selection of the F&O stocks for trading should be done very carefully. We have shared all the rules for selecting the best stocks along with the latest NSE F&O stock list to help you make the right decision. We hope it helps. 

This is not an investment advisory. The blog is for information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs. The performance and returns of any investment portfolio can neither be predicted nor guaranteed.