Investors are advised to trade in derivatives including options, only if they have
adequate understanding of the product. Derivatives are complicated
leveraged products with a potential for oversized gains or losses. Also,
Options have complex nonlinear pay-offs. So it is very important to
understand all the associated risks and returns while trading in these
products. Further, clients are advised to refrain from being influenced
by emails, SMSs and social media messages promising high/assured
returns.
Clients / Investors should also abstain them from dealing in
any schemes of unauthorised collective investments/portfolio
management, indicative/ guaranteed/fixed returns / payments etc.
Clients should take following precautions while trading / dealing in derivatives / Options:
a) Avoid sharing of trading credentials – login id & passwords including OTP’s, trading strategies & position details
b) Trading in leveraged products like options without proper understanding, which could lead to losses
c) Writing / selling options or trading in option strategies
based on tips, without basic knowledge & understanding of the
product and its risks
d) Dealing in unsolicited tips through Whatsapp, Telegram, YouTube, Facebook, SMS, calls, etc.
e) Trading in “Options” based on recommendations from
unauthorised / unregistered investment advisors and influencers.”
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Warren Buffet world's most successful investor famously said that "derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal
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