Derivatives risk disclosure
Futures and options can lose you more than you put in. A written call's loss is theoretically unbounded. Positions expire on a schedule you do not control, and short options can be assigned, creating obligations in the underlying.
Live derivative entry is refused by the platform today: see Derivatives overview. This disclosure applies to what you can reach now (backtest and paper) and, in full, to any future live path.
This is in addition to the general risk disclosure, not instead of it.
Leverage
A margined position can lose more than the margin posted.
A cash equity position's worst case is the equity going to zero. A futures position's worst case is set by how far the underlying moves, and that is not bounded by your deposit. If the move exceeds your margin, you owe the difference.
No risk configuration on this platform changes that. The gates block new orders; they do not bound the loss on a position already open.
Unbounded loss on written options
| Position | Maximum loss |
|---|---|
| Long call or long put | The premium paid, genuinely bounded |
| Short (written) put | Strike minus premium, per unit, to zero, very large |
| Short (written) call | Unbounded. There is no ceiling on the underlying |
A short strangle or short straddle has unbounded loss on the call side. An iron condor's long wing caps it, provided all four legs are intact. Which is why coordinated close matters: three legs of a four-leg structure is a naked short option with a completely different risk profile from what you opened. See Multi-leg structures
Expiry
Expiry is the only risk here with no market-based exit. Every other exposure can be traded out of; expiry arrives on the exchange's schedule regardless.
| At expiry | What happens |
|---|---|
| Long option, out of the money | Lapses worthless. You lose the premium |
| Long option, in the money | Settles per exchange rules |
| Short option, in the money | Assigned. You acquire an obligation in the underlying |
| Future | Settles per exchange rules |
Assignment is the one that surprises people: a short option you forgot about becomes a position in the underlying, at a size set by the lot, at a price you did not choose.
Build the expiry decision into the strategy (a time exit, an expiry-day condition, or a roll) rather
than relying on being present. The engine exposes an expiry session flag that exit conditions can
read.
Lot-size granularity
Positions are whole lots. If one lot's risk exceeds your per-trade risk budget, the smallest possible position is already too large, and there is no fractional lot.
The correct response is to increase the allocation, choose a cheaper instrument, or not take the trade. Revising the risk budget upward to fit the lot is how a sizing discipline quietly disappears. See Margin, leverage & lot size.
Margin calls and forced closure
Your broker may close your position on a margin shortfall, at a price you did not choose and at a moment you did not pick. Stretus does not control this and cannot prevent it.
The platform's margin model over-reserves for hedged structures, which errs safe on the platform side. It does not protect you from your broker's own requirement, which is the one that counts.
Premium behaviour is not price behaviour
An option's premium is not a linear function of the underlying. It decays with time, expands and contracts with implied volatility, and its sensitivity to the underlying changes as it moves.
Two practical consequences:
A percentage stop on a premium is a much larger move than the same percentage on the underlying. A 25% stop on a ₹120 premium is ₹30 of premium, which a small underlying move can cover.
You can be right about direction and lose money. Time decay and a volatility contraction can take more than the directional move gives you.
Liquidity
Far-OTM strikes and back-month expiries can be thinly traded or effectively untradeable. A structure that backtested on a stitched continuous series may have legs with almost no real depth at the moment you need to close.
Circuit limits, halts and expiry-day mechanics
Derivatives are subject to their venue's own state. An instrument that cannot be traded cannot be exited, and expiry-day sessions have their own mechanics.
Platform-specific risks
Stated because they are properties of this implementation rather than of derivatives generally.
Live entry is refused, and that is the safe state
The live exit path is not implemented. Rather than leave a capability that could open a position it cannot close, live entry is refused with a typed non-retryable error, logged at warning level.
If a live derivative position exists from before this gate landed, it needs an operator. A force-close surface exists for exactly that case.
The kill switch is fail-closed
New derivative entries can be halted at global, tenant or strategy scope. If the halt state cannot be read, entries are blocked. That is the correct direction, and it means an infrastructure problem stops new derivative entries rather than allowing them through.
No spread margin benefit
Hedged structures reserve gross per-leg margin. Conservative on the platform side; it bounds what your allocation can hold.
Costs are heavier and are order-count driven
The ₹20 flat brokerage is per order. A four-leg structure round trip is eight orders. On a one-lot position that can be a large fraction of the expected outcome, and it is easy to miss when reading a percentage return. See Fees & charges
Before you build a derivatives strategy
Even for paper, because a paper habit becomes a live habit.
- I understand a margined position can lose more than the margin posted.
- I understand a written call's loss is unbounded.
- I know the lot size, and one lot's risk fits my per-trade budget.
- My strategy has an explicit expiry decision, not an assumption that I will be watching.
- I understand a short leg can be assigned.
- I know the strategy's cost per round trip in money, given its order count.
- I have read the general risk disclosure.
- I know live derivative entry is refused, and I am not planning around it.
If you are unsure
Do not build it. Derivatives are the instrument class where the gap between "I understand this" and "I understand this well enough to automate it" costs the most, and the automation removes the pause where a human would have reconsidered.
Start with cash equity or spot crypto, where the worst case is bounded and the sizing is granular.