Last updated: August 2026
Options and futures on the NSE are leveraged instruments. A relatively small adverse move in the underlying stock or index can result in a large percentage loss — potentially the entire premium paid on an options position — in a short period of time. This risk is fundamentally different from, and generally greater than, buying and holding the underlying equity itself.
Derivatives allow you to control a large notional position with a comparatively small amount of capital. This magnifies both gains and losses. EdgeRegime's Position Size Suggestion is calculated from your stated capital and risk tolerance, but does not eliminate leverage risk — it is a mathematical sizing aid, not a guarantee against loss.
Option prices can move sharply on changes in implied volatility alone, independent of the underlying's price. Less liquid contracts — wide bid-ask spreads, low open interest — can be difficult to exit at a fair price, especially during fast-moving markets. EdgeRegime's Option Quality score reflects pricing and liquidity conditions at the time of calculation; these conditions can change materially within minutes.
Options lose value as they approach expiry, independent of any movement in the underlying — a phenomenon known as time decay. A directionally correct view can still result in a loss if the move happens too slowly relative to the time remaining on the contract.
Prices can gap significantly at market open due to news, global market moves, or events occurring while Indian markets are closed. This risk is explicitly relevant to BTST (Buy Today Sell Tomorrow) positions — see the BTST-specific overnight-risk notice on that page for more detail. Stop-loss levels calculated during market hours cannot protect against a gap that occurs outside trading hours.
Option sellers (writers) can be assigned the obligation to buy or sell the underlying at any point before expiry, particularly as expiry approaches or around corporate actions. If you write options based on EdgeRegime's analysis, you are exposed to this risk independent of the platform's scoring.
Every score, decision, and risk parameter EdgeRegime produces is a probabilistic estimate based on historical patterns and current market data — not a guarantee. A high Trade Score or "BUY CE" decision does not mean a trade is free of the risks described above. You are solely responsible for your own trading decisions, position sizing, and risk management. See our Disclaimer for further detail.