You can be a buyer or seller of these options. At the same time, Santosh is looking to sell off its SBI stock holdings in the coming days. December 20, at So net-net you are losing 2 points. Yes, please do check this — http: March 20, at
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However for Nifty there are several different expiry options. Leaps are good if you have a super long term view on markets.
However the problem with leaps in India is that they are not liquid, there are hardly any trading activity here. But there is hardly any liquidity here — http: The interest rate is an input variable here — please note this is a critical input for implied volatility model. As usual, nice and simple explanation…I am not trading in options as I could not understand it well.
Now, I think I am clear. Whether profit will be 3 or -2 can u clarify the profit based on premium not SP? You can exercise the option only on the expiry day, however you can book your profit due to the increase in premium. Sir, thanks for the easy concept on option. What I understand we can square off any position in option too before expiry date if profit is decent or stop loss set is triggered, in liquid stocks.
Only the thing is that we have to pay the brokerage twice. Is it that we can not put SL for options? One more clarification I want to get is that the options are exercised means we have buy the underlying asset or the price difference will be adjusted in cash in case of the share market? You are right — you can square off anytime you wish…if you let the option for expiry there is no brokerage…otherwise you need to pay twice.
I read somewhere if option exercise by exchange then we have to pay a huge penalty. What do u mean by exercise the option. Yes, please do check this — http: That means we can square off at any point of time before or on expiry 1. Before expiry we have to pay the brokerage twice.
On the expiry no brokerage but we have to do it by our own 3. Else exchange will exercise that option on our behalf and charge huge penalty. Is there any specific process on zerodha to buy a XYZ stock at strice price or exercise the options.
OR a normal stock purchase transaction on expiry day will be treated as exercise? To exercise, you simply have to hold the position and let it expire. Check this — http: As usual Karthik at his best starting with options…only concern is the time taken to upload other chapters Thanks once again Karthik for your splendid efforts…. Thanks Krishnan, it takes a bit of a time to upload chapters apologies for that.. Will include it towards the end of this module.
However check this link for option calculator — http: I have been following the lessons for months now and heartfully thank you for them.. I wait for the each chapter to be published with great enthusiasm.. I found your TA chapters very helpful and easy to understand..
It would have been great if beginners like me could have had a paper trading platform where they could try their hands before with TA based trading.. Thanks for the kind words Rohit. It is gratifying for us to know that people are indeed benefiting from these modules. We try and do something about this. Karthik sir Thank for Ur valuable effort Waiting for Ur other valuable chapter about option trading. Selecting the strike price is a function of time, volatility, and expectation on market movement.
So in options at expiry.. All derivative contracts are cash settled in India, hence the actual movement of stocks does not happen. Nifty is a well diversified basket of stock with representation of nealry 21 sectors.
Bank Nifty is sector specific index hence more volatile. You can trade stock options, there is no issue with that. Hi, Superb Explanation Karthik…Really it is great help full to beginners like me…Thank you very much for making educated us about all these things….
I would suggest you try out Zerodha Margin calculator for this — https: Since PE is out of the money option you will not get much margin benefit, however if you select in the money option PE there is margin benefit for the same. In fact the margin to buy 1 lot Tata steel is approximately 20K, add to this PE, you get about Rs. If some one tells buy infy equity since shortage of funds can we buy Call option Infy ?
Generally speaking buying a call option should not be an alternative to buying in spot market. However if the decision is to buy Infy for a short term few days then maybe one can explore the idea of buying the call options. I have a couple of questions today unrelated to options: There is such a relationship between the two indices, right? On sites like moneycontrol. As you may know Beta of Nifty Index is 1 because Nifty is a market portfolio.
However Bank Nifty beta should not be considered as 1 as based on market portfolio theory , the reasons for this are as follows —. Given this, Bank Nifty on the other hand, even though is an index , it cannot have a beta of 1 like Nifty. This simply because it is not a market index. Bank Nifty is just a representation of the banking sector, which is a subset of Nifty. Hence for this reason it makes sense to calculate beta of Bank Nifty. If you have gone through this chapter — http: Request you to go through the same.
But this is not set in stone, their guess or estimate is as good as yours or mine. In fact nothing is set in stone when it comes to market. So please keep an open mind and adapt to events and markets as it evolves. So please keep an open mind and adapt to events and markets as it evolves……. We should never listen to anyone on Tv…trades should be done only according to TA…. I just want to know that buying a call or selling a put is same thing from the point of view that when market goes up you will be in profit.
But how to select that buying a call is appropriate or selling a put? Same thing is for selling a call and buying a put. Is it not correct to buy a put rather selling a call to make loss limited? Well, this depends on the premium. If the premiums are too high then probably selling a Put maybe more profitable than buying a call. Else if the premiums are low buying calls may make more sense than selling a put.
There are many factors that drives the premiums…we will understand all these shortly in this module. Nice to see that you have started option education series. Since option is complex I am sure most of us will be benefitted from This.
Nice work, keep it up. Hi Karthik, I am a newbie to options , In india when we trade options, we never buy the stock right? Absolutely, all options in India is cash settled. I hope Varsity will help you understand options completely! Lot size is fixed by NSE — suggest you start from this module http: Likewise if the price goes below Rs. The agreement is to buy the stock at 75, which is also called the strike price.
So when the price drops to 65 — you still need to honor the agreement and buy it at The 2nd scenario is supposed to be flat…will make that change. Thanks for point that out. NEST Plus is free to use. Whom did you speak to?
Just finished reading the Futures module. Is it possible to provide all the modules in a PDF format?
We are working on converting these topics in PDF and iBooks. It will be available very soon. I request you to add information about required certifications for making a career in the field of trading. Do have a look at this — http: Premium increased to 10 rupees. How we will come to know whether the options are trading at correct premium? They may be trading at high valuations are low valuations right?
Is there any tool to find out that? For this you need an options calculator. We will discuss the same towards the end of this module. Please explain it with an example. Its explained here — http: I do not like to avail of service and pay. Is there any method which i learn so that i trade in options profitably by my self. Suggest me a reading or explain yourself about how to trade profitably in options.
I shall read all your chaptrs. I started reading your this site only today on 31St july Hi Usha — please do not pay for or opt for such services. They are all useless. Starting reading from chapter 1 and progress along…reading and understanding the subject is a 1 time lifetime effort…and after that you will never think of opting for such services. Sarath — there are two things here. One is receiving the buying and selling options on the same day or anytime before expiry …in this case you will receive or lose money as applicable.
The other thing is buying or selling an option and holding it till expiry…if you do this, then it is deemed that you are exercising your options. When you excercise your options you will receive a settlement price if any as applicable. I trade in commodities and there we may or may not have profit but the turn over is in crores. Do i need to fill ITR What type of account data i need to hold for incometax purposes. Usha, everything answered in this module: Sir,I have gone through your TA it is excellent and superb, simple to understand with real time examples.
One doubt remains in me regarding Support and Resistance and Trend Analysis. And how to differentiate between them? What is meant by option will expire worthless on expiry. Suppose if I bought Nifty CE for strike price of and on expiry Nifty closed at level then whether the option buyer will get profit or not.
Can you please clarify the logic behind option pricing. Hi, many thanks for the above chapter. Nifty call bought at Rs 35 On expiry nifty is The call option is trading at Do We need to square off the position on expiry day to exercise the option or is it automatic if we are in the money?
Why is ITM option is not trading at intrinsic price on the expiry day? Why is it trading a little less than that? Its automatic upon expiry, if you are long options contracts. Could you please eloborate the above explaination in terms of the lot size of 75 and actual Profit earned. No PDF because the module is still not complete. Chapters between 6 and 10 are there.
Are you referring to the modules as such? Working on one module at a time…Module 5 just got done…starting 6th soon. By the way 7th module is complete…you may want to check that. If suppose i square of this today, what will be my profit. The break-even calculation is right. Since you are closing the trade before the expiry your profits will be the amount of premium you pay to buy minus the amount of premium you received while selling it.
So in this it would Rs. After August , all data including for strikes XX50 type is available. Or there is some other reason. My question is …… can we sell the option call any time before the expiry date or only on the date is fixed??????? Karthik, Which ones less risky options or day trading? Can you please lay down the perks of day trading compared to that of options?
For this particular call option, to buy a lot, am I supposed to pay Hi sir pls tell me how much margin i need to deposit to short a call option..?
Option shorting margins is similar to futures margin. Check this — https: HI, sir I have read this module…. Yes as long your option does not have any intrinsic value your short option position will make money.
How can we consider It is high or Low? Hi, sir There are are different Iv in all strikes, according to Option theory when IV is high Option Premium would be high and vice versa. Hi, sir Please explain this Interpretation when Iv is high premium would be high and vice versa. Volatility is one of the key drivers for the premium. Higher the volatility, higher the premium…vice versa. Suggest you read the chapter on Vega. Hi,sir We are very great full to you for giving such precious informations.
Now confident level is increasing……. Thank you so much. All our content is made available for free online. I have a query.
Will I be profitable I. You can sell the option if you choose on the very next day and take home the profit i. There is no requirement for you to hold on to this till expiry. When calculated the profit is negative.. Thank you Karthik and also would like to say you have a wonderful module and you make learning very simple.
Options sounded like greek when people spoke about it now it makes sense after reading first 3 chapters. Guess i got a long way to go.
Hello Karthik, I am a newbie just trying to get into the markets. I have been reading various articles and have just started going through your lessons. The explanations are extremely lucid. There are so many different ways and means of playing the markets that it really is confusing for a newbie just trying to figure out where to start and what to do or not to do.
Basically I need to know the following: In Chapter 19 you have suggested that a beginner start with Swing Trading and then graduate to Intraday. Should a newbie trade in individual stock after doing required research as per your suggestion or should one trade in NIFTY Index Lots 3. Can a newbie start with Options as I found the concept interesting But is it advisable to start Options as your first step in Trading? Would be much grateful if you could give me a clear Roadmap on what to start off with so that I can get a sense of direction!
Option payoff is non linear, unlike futures which is linear. This holds true for both option buying and selling. One needs to be aware of this along with its characteristics in its entirety..
Hi Karthik, Plz suggest me regarding nifty index option that which strike price should I choose from related to spot price otm,ATM,inm. I also want to know whether the premium of call option will get reduced nearing to expirydate, if it so can I exercise my contract and make profit out of it? Since i am a newbie to share market as a whole, plz clarify me about this. From where I can read your options lessons?
Request you to kindly read through the same. The feeling I get from going through your modules is similar to someone bringing you a bottle of chilled water after knowing that you have been stuck in some desert for two or three days without any water or food.
Keep up the good work. I pray for your well being. Its very impressive exaplanation abt options. However if you are particular about intraday, then derivatives is the best option. Also, to minimize losses you could try hedged position in options. We have discussed various strategies here — http: But then it depends on how and why you are writing options. Hi, i am new to option…. I little bit understood the concept but i do not know how to implement like … say my prediction for the next week is that Buy at tgt and if short then short at with the target of now who me to place this in the option…… what to choose in CE and PE Need you support Mr.
As you read through this module, you will realize that we discuss everything with respect to strike selection. So my suggestion for you is you should read through the entire content and you will be clear on selecting the right strike.
Sir, I just want to know how to exercise call option on expiry, whether it is automatically done broker or i have to do something. Request to think about that please let me know if I can do it for you…Thanks. That will depend on the premium of the put option. When markets crash, the put premiums tend to go up and therefore your futures position is hedged. What happens to premium of a call and put option if underlying prices move up? I think you explain better in the comments section!
I seriously learn more from the comments section. Which one do you think is more appropriate for analyzing the positions to be taken in options contracts? Should I be indifferent between the two? The underlying is Nifty 50 index, so it always makes sense to look at the underlying and develop your point of view. But immediately after this, mtm loss is shown as I purchased 2 lots of December contract.
When I asked, I was told that this is due to bid ask spread. The reason why I purchased is because of low vix. Will the bid ask spread narrow down? Or to break even how much should the premium rise to? Sir, in order to escape significant time decay, I wish to buy options whose expiry is 45 to 60 days away. Under the Indian context, which options are liquid for even otm strikes? Sir, how do we measure liquidity?
Suppose I want to buy 20 lots. Then roughly what should be the minimum lots in open interest and minimum lots in bid and ask prices to be called as sufficiently liquid? One way to look at liquidity is by looking at the bid ask spread and impact cost. I m confused with the date. After knowing above Call option basics , i think to deal with Future Trade is more suitable than Call option. Well, both these instruments are very different. Remember, a buy call and a sell call works differently and has different pay off features.
This versatility is not there in futures. I have discussed this in multiple places, request you to please go through the contents. Both of them are closely interconnected, you will understand this better as you progress reading through the material. Expiry day is fixed by the exchanges which is the last Thursday of the month. Profit will be difference between the premiums i.
Be careful of what you buy on expiry day, especially due to the STT trap on options. Check this post — http: If I dont buy this option and closing price of maruti on 30 march is above for e.
What will be my profit or loss? Hello sir, Thank you so much for teach us in this systematic and logical way it sir as i am reading through this module i have lots of misunderstanding one of such is this Suppose i short a OTM CE option say Delta at 0.
I mean can he close his position before expiry and benefit from premium fluctuations or he has only two way to stay in trade 1. I have to say understanding options from sellers prospective is confusing for me may be due to i knew to options. Sir i request you please try to upload some extra supplementry notes for shorting options regarding their pay-off Lastly i cant explain in words my thanks to you for every thing you teach me Stay healthy and keep rocking…..
Ankit, the same is applicable for sellers also. They can write or sell option and get of the the trade very next minute or they can choose to hold on to the trade till expiry. The best way to learn this is by experiencing it once. Will i get 8 rs profit on the same day? However, before the expiry your profitability is the difference in premium. So yes, you can pocket the profit of Rs. Dear Karthik, I just got to know about options. I trying to fully understand it.
Hi Karthik, I have a query , Strike prize should be a price which is min. Strike selection is a very tricky process. It is not just about the price, it also depends on volatility and speed at which the market moves. Suggest you read through this module to get a fair sense of how it works.
Dear Sir, Who makes options or futures contract? The stock market or the respective companies? We know that companies releases shares in the market when they have requirement of funds. But who releases the option and future contract to be traded in market? Sir, In the example given above if Venu decides to settle the deal with cash instead of selling the land directly, Ajay will be getting 4 lacs and Venu gets to keep the land right?
Now from Venu side, these are the calculations right, Amount received as premium is 1 lac Amount paid as a part of the deal is 4 lacs Now he still gets to keep the land and if he sells it to some third party, then he would be getting 10 lacs and subtracting whatever he spent earlier, he would be left with exactly 5 lacs.
But instead if he choose to give away the land, he will get to keep only 1 lac and 5 lacs paid to him as a part of the deal. Now finally he gets to keep 6 lacs with him. Should this mean he should always sell the land instead of settling it with cash? He can choose to do that, this is an example to convey the concept along with introducing the concept of cash settlement.
In India all options are cash settled, hence it makes sense to stick to cash settlement. OK thanks… I read options theory part 1 up to chapter You are doing extremely good job. Please provide rest of the module as soon as possible. Hi, A question related to options traidng.
How much funds will be required for this call buy transaction? Is the current price shown for the options for a single contract or for a single LOT 75 contracts? Please explain the meaning of LOT and how its related to current quote price. I have never done any transaction in options so wanted to get my following calculations clarified. If I wait till expiry and spot trades below strike say Premium must be trading at higher levels compared to 3.
Is this reasoning correct? Say if there is 1 day to expiry and spot is at , then CE is likely to trade below 3. He had paid Rs 1L 6 months in advance. We should also consider Time Value of Money. Hence the Interest cost opportunity cost should also be factored. So effective profit would be Rs — Rs which is Rs Again if he can put the 1L to much more productive use in other avenues say his business , profits would further reduce to that extent.
Is that all and no Margin is blocked? For buying options there are no margins, you only pay the premium in full. So with , you can initiate the position.
Very useful write ups provided by u. We could not even learn in class paying huge amount. Thanks for providing such detailed information. I have 1 querry i. Secondly If i buy a call at Rs.
Whether my premium also will be credited? What categories to be applied. If you have an account with us, then you get access to charting on Kite. Check out more details on charting here — https: You may also want to check out the module on TA for drawing inference on price movement — https: If i buy a call rs 8.
If the above scenario happens on last closing day, whether option buyer will loose his entire premium of Rs. Pl correct me if anything narrated above is wrong and pl explain about the situation of settlement.
In this example, the option buyer will neither make or lose money. Of course, he will have to pay for the charges incurred like brokerage, transaction charges etc. Really thanks for your valuable guidance. U r taking so much efforts to make us learning and encouraging us for trading. CE purchased on 3rd Oct. Now I have a question that I purchased a call Rs. Now the premium price for same lot , and price on 4 th of Oct expiring on 26 th Oct.
In this Decreased or increased situation can i sell my option CE on Rs. If profit made, profit and premium paid will be credited to my account on 4 th Oct or on 26 the Oct.. Yes, you can sell the option at 11 and make a profit of 8, no need to wait till expiry. Yes, you will get the profit credited to your trading account on 4th. Recently I am going thru your Technical Analysis Module which gives pleasure in reading and understanding. Your modules are as good as you are teaching in class, that much effective information is provided and hence a Lay Man like me can get understand the tricks of trading.
It is now 8 days and sent 3 email reminders. Can you please ask why they are showing so unprofessional behavior. No one contacted me till now: Sorry to say but very unprofessional behavior.
I noticed one more issue in Kite. Please tell me where I am wrong. Since these are intraday trade, you lost 13 points in the first trade and now on the 2nd trade, you; ve made 11 points. So net-net you are losing 2 points. You replied below query but not mine.
I am still learning after studying all the theoretical now I am doing practical. And I am noticing bugs in profit calculation therefore asking you to clarify my doubt. Now I am stuck what should I do? We answer ALL queries that come in here. Really very nicely explained chapters, I am still going through the chapters. I had just a simple query regarding Bank Nifty.
Bank Nifty as the name suggests is group of banks that decide Bank Nifty Index. Will you please indicate different parameters , stocks etc. Everything about Nifty Bank is here — http: For this reason, its available only in English. The article is super and your patience in answering each comment here is commendable too.
This is the first article I read on your site and am interested enough to start at Module 1, chapter 1! Thank you, Karthik, for your efforts in creating and maintaining this varsity. If Ajay pays Rs. Hey In the case that the land price remains 5L, Ajay should be neutral and not opposed to buying the land. In fact, the amount paid as premium should not factor into his decision on whether to buy or sell the land. Can a stop loss be placed for options?
If yes does it remain valid intra day and we have to manually place it again next day or does it remain valid once placed till it is triggered? Commodities go on till Then is there are any chances that my premium value comes to zero?
In fact, you can square off anytime before the expiry. Thank you sir for reply. Suppose 1 day before expiry it is trading at 50 CE. Suppose 1 day before expiry it is trading at 5CE. Suppose in swing trade , I am in loss in this contract and did not close my position on expiry ON 3. Capital gains will be taxed based on your income bracket. Suggest you read this module on taxation — https: And also if market trends up again till Jan my prize also goes up?
Or am I obligated to hold that position till expiry? Both buyers and sellers of options have the flexibility to square off their positions anytime they wish, no need to wait for expiry. And as per expectations price and premium goes up therefore i wanted to book profit. I was entering exit order at market price but everytime order was getting rejected. When we buy option we have right to exercise it any time then why my order was rejected? After entering exit order for minimum times my sell order gets executed n i earned profit.
So, please tell me whether i was doing any wrong process or there is something about call square off before expiry which i dont know.. Sir, I was not getting any error. At end instead of selling at market price i clicked on limit price that time my order gets executed. Ah, I get it. We do not allow market order for stock option, it has to be a limit order. This is because of the lack of liquidity and the associated volatility. Also, whenever an order is rejected, there will be a rejection reason which is displayed.
That will give you the information. Is it easy to sell this huge qty on expiry day? As you have mentioned in the module Call Options , the loss is limited to the premium that we paid.
Infact it went down. Since the price went down, I did not sell the stock as i do not want to take more loss. The loss when you buy an option call or put is restricted to the extent of the premium paid.
Hence, your loss here would be Theoretically, when PE increases, CE should decrease and vice-versa. Options premiums have multiple forces acting on them simultaneously. The direction of the market is just one of them. But the answer to your query is because of Volatility. Increase in volatility increases option premiums and vice versa.
I need to execute the below orders 1. Buy 1 lot of Bank Nifty options i. Sell 1 lot of Bank Nifty options i. The maximum loss I can incur is around and the maximum profit is around , then why do I need 59K? Is it a requirement from Exchanges? I bought Reliance Call at Rs. If I buy option for intraday MIS as order. Can we expect monthly unlimited plans for options traders or derivative segments?
Because of this plan so many peoples are preferring to open account in ProStocks especially day traders. Hope you will come with some plans for day traders too like investors, there is no doubt about your services one of the best broker in India thank you so much for this.
Sunil, multiple plans only confuse clients. Now can i square-off my position at this stage or do i have to wait mandatory till the contract expire. No extra charges for this.
If you leave the option to expiry, that is considered as expressing your interest to exercise the option. Please clear my doubt regarding options trading. I purchase 1 lot of the same. Can I book profit by selling that 1 lot even though the stock has not hit the strike price? Two days later, it went all way up to Rs.
Finally, it expired worthless resulting in a loss. If I buy any stock in option,and I want to sell in stock in profit,so I can wait for my expiry date or before I can book profit. There are only 3 possible scenarios, out which 2 indeed benefit Venu. Statistically, Venu has You have considered all possible outcomes equally probable. I get your point, Rayan.
Perhaps I should have worded it better. What I really meant to say was — out of the 3 possible outcomes, 2 favor Venu. This gives Venu an edge, but like you mentioned, all the three scenarios have an equal probability of occurrence. I guess you did not understand my question.. I just have a query. Is it necessary for the option contract to cross the strike price to be in profit.
Or we can book profit by squaring off on the same day or days after if the premium is increased, but still the strike price is not reached. Eg — Purchased Put option of Nifty with a strike price of 67 squared off at premium , but the strike price of is not reached yet. And how to calculate profit after the contract crosses the strike price?? Your profit will be the difference between the buy and sell price of the strike…i.
All my doubts are cleared now regarding the calculation of profit. I am feeling more confident now. Upone expiry, if you exercise your option and If STT is more than intrinsic value, then zerodha will automatically lapse it. You need to check this, Sandeep — https: Regarding the new rule of product suitability to curb retail participation in fno products will this be extended even to intraday stock trading with leverage BO and CO orders or is it limited to only futures and options?
Hi Just opened an account with Zeroda. Nothing really, you just need to have enough margins. You can use this for figuring out the margins required — https: Hello, I am new to trading.
I want to trade in Call and Put options. Kindly guide me How and Where to start. Sir pls have one module on option chain analysis. Since two days i. Option Stock market orders are not allowed block type: One thing I am not understanding whether this problem is only with me? Market orders are not allowed on stock options due to liquidity issues. You can, however, place a limit order.
You can read more on this here. Are you placing a market order in TCS options? If yes, Mkt order is not allowed in stock options. I am a beginner. Option call is nicely explained with examples and I think probably I understood. Now my query is , does the premium price a function of difference of price between current and strike price?
These are ITM options and they are the safest to trade when in confusion about strike selection. Hi, Thanks for your kind support and knowledge sharing… Your way of teaching is very good and easy to understand. Thanks karthik for this informative module and the even more informative patiently answered comments. The current premium could, in fact, be much lower than —not likely but possible. Is the problem that finding a suitably priced option seller is hard, or that offloading it at short notice is hard, or that offloading it at all when opportunity presents, and before expiry, at a suitable price is hard?
In other words, assuming large favorable movements in the index, is it that the full potential profit cannot be realized, or that there is a risk of getting no profits at all? Higher the liquidity, better it is 4 In fact, no defaults in NSE on anything till date: The margin deposit is a function of volatility, higher the volatility, higher is the deposit. Long-term options have low liquidity, hence prices are also skewed. Hi, I am a newbie to the stock market but understand the basics, i.
Question 1 What will happen to the call option example if we buy a call option of xyz share spot price and strike price call purchasing price is 4rs. Question 2 if we buy a put of abc share expecting that the price will fall but it falls more than our strike price still we will be in profit and can we still hold that put buy position? Hi Sir, I will really appreciated if you can let me know how to place stop loss order for stock options.
I have the facility to place Stop Loss Market order but that is too dangerous. What other choices do I have? How can I make sure that my order is filled and with minimum slippage. Now how can I sell this call option with minimum slippage as 46 rupees is too high to loose. Will really appreciate if you can help me with this. Thank you very much in advance. Ron, you cannot place a market order in stock options with Zerodha.
The only way to control slippage is by placing limit orders. Else, ensure you trade in options where the liquidity is high, hence low slippage. Hi Karthik, Thank you so much for your reply. Once again the question is below.
Ron, the only way to avoid slippage is to buy or sell at specific price, which you can do so by placing a limit order. If you place market orders, then there will be slippage.
Whats the difference between options and futures? These two topics are very elaborate. Ankesh, you can look for this in Kite itself. More on charting here — https: Hello Karthik, Can you please through light on this, assume a situation where Nifty 50 is at 1st Sept and i have Long Call position on with premium for 27th Dec Please tell me that what will happen in terms of premium..
Vinayak, you will not have Dec contract available in Sept. It will be available only in Oct. Anyway, estimating the exact value is difficult. But your profitability will be highest on 30th Sept and lowest for 27th Dec. Now we have 1 week left for the option to expiry, do you think it will work out. And if the nifty closes above 10, then I will get to keep the entire amount of 2. A very stupid question then why not everyone sells these OTM options and make sure that they make some profit if not huge profits.
That makes sense, Ron. Most sensible people try and write OTM options and collect small but steady premiums. However, this does not attract the majority of the trading community as they seek quick and large profits buy OTM options. Yes, the physical settlement is applicable only to stock futures and options. Not the index futures and options. In the following comments i see people talking about, two ways to booking profit.
Increase in premium, booking profit. I understood 1st one. Can you ellaborate on the topic related to premium and profiting. Vicky, you can book profits when you think the premiums have gone up, no need to wait for expiry.
I guess this is what the 2nd point talks about. Himanshu, there is no weekly expiry for any other instrument apart from Bank Nifty.
Even though I get the direction correct I end up not making money. Let me just explain my problem with live trade I still hold the position. The direction was correct and I could see around 20, rs in my portfolio while the Underlying closed at But later in the afternoon the underlying stock went up and the close for the day was My portfolio now shows a negative value of rupees.
My concern here is that I buy long put when the stock was trading at and now the stock is at so which means my option should still have some positive value, why is it negative rupees. My guess is the my option value should see negative value only if the underlying starts trading above level.
I just hope that I was able to explain you with my problem. Ron, I understand your concern. This approach is not correct when you are dealing with the options. Remember, the option premium is affected by not just the direction delta but also with the speed at which the direction changes gamma , time theta , and the volatility vega.
So when you see the option premium as say Rs. So in your case, the direction was in your favor, but time was not 15 more days to expiry , and going by your explanation, I suspect the volatility was high when you bought the option and it kind of cooled off when the stock bounced from to Also, when you are dealing with options, be quick to take profits off the table, especially when you are not planning an expiry strategy.
Thank you so much Karthik, really appreciated your quick response. What do you prefer personally to trade. Dear Karthink, One more question. Also, can you please tell me why does this happen? So, doest that mean I cannot buy next or far month contract if I want to buy that today i.
This is because not many traders are willing to trade these contracts, hence the liquidity is low. How does this change Impacts in Intraday of Options? You'll learn how professional options traders approach the market, including the trading strategies and risk management techniques necessary for success. You'll gain a fuller understanding of how theoretical pricing models work. And, best of all, you'll learn how to apply the principles of option evaluation to create strategies that, given a trader's assessment of market conditions and trends, have the greatest chance of success.
Options trading is both a science and an art. This book shows how to apply both to maximum effect. Sheldon Natenberg begins with the option pricing model and then moves into volatility and the Greeks.
Volatility is a complicated topic, and Natenberg provides a great start as he breaks it down into easy to understand principals. He also covers more into spreads and specifically into volatility spreads. A volatility spread is a spread that is delta-neutral, sensitive to changes in the price of the underlying, sensitive to changes in implied volatility and sensitive to the passage of time. Now that we've found the books we need for option basics and the more advanced topics lets drill down to some specifics.
The Option Trader's Hedge Fund is a great book for running a short option portfolio. Don't let the title scare you away this is not geared towards hedge funds. In this book, a hedge fund manager and an option trading coach show you how to earn steady, reliable income selling options by managing your option trades and running your options portfolio as a real business with consistent, steady returns.
For someone who has some knowledge of trading options and wants to become a consistent income earner. Mark Sebastian details out the strategies used toe run a short option portfolio such as vertical spreads, iron condors, iron butterfly, time spreads and ratio spreads. He details out how to build a portfolio and run it like an insurance company because selling option credit is like selling insurance.
Packed with his experience from the trading floor you can see how market makers handle risk management, trade execution, and the Greeks. If you are going to be an options trader, you need to know your Greeks, and there is no better book than Trading Options Greeks: The Greeks are going to tell you how your option price moves as the underlying moves delta , the passage of time theta , volatility movement vega , and the change in interest rates rho. The options market is always changing, and to keep up with it, you need the greeks—delta, gamma, theta, vega, and rho—which are the best techniques for valuing options and executing trades regardless of market conditions.
In the Second Edition of Trading Options Greeks, veteran options trader Dan Pasarelli puts these tools in perspective by offering fresh insights on options trading and valuation. An essential guide for both professional and aspiring traders, this book explains the greeks in a straightforward and accessible style. It skillfully shows how they can be used to facilitate trading strategies that seek to profit from volatility, time decay, or changes in interest rates.
Along the way, it makes use of new charts and examples and discusses how the proper application of the greeks can lead to more accurate pricing and trading as well as alert you to a range of other opportunities. Like Mark Sebastian, Dan Passarelli spent time on the floor, so his experience comes as a market maker. Dan starts off with the Greek basics but quickly moves into more advanced topics such as spreads, volatility and using the Greeks in your trading.
Moving on with our advanced topics we are going right in with Options Trading: We will be the first to admit that this book is going to be the more difficult one to get through. The writing will be harder to follow so a couple of passes through this book is necessary. However, we still recommend this book because it is going to cover a wider more abstract range of option topics.
Charles deals with option synthetics, put-call parity, hybrid hedging and adjustments. The book teaches readers when an adjustment becomes necessary and which adjustment to go with. It helps to take the emotion out of trading and turn it into a more mechanical process. The Learn Options eBook is a great reference book to keep handy.
Buy Trading Options Greeks on Amazon. Options Trading: The Hidden Reality by Charles Cottle. Moving on with our advanced topics we are going right in with Options Trading: The Hidden Reality. We will be the first to admit that this book is going to be the more difficult one to get through. Check out the best mobile trading apps in India with reviews from original clients, market analysis, play store and iOs ratings, mobile app features and more. Apart from that, there is a detailed video review on Best Trading Apps in India with information on features, merits and demerits of these trading apps. So, these are the 5 Best Stock Brokers for Options trading in India. As mentioned above, a thorough research has been performed before coming up with the above-mentioned list. In the end, this needs to be understood that Options trading is something that .
Read reviews and buy the best commodity trading books from top authors, including John Murphy, Jack D. Schwager, Jim Rogers and more. Learn About Put Option on Futures Contracts in Trading Commodities. How Impact of the Dollar on Commodity Prices. Learn About Planting, Harvesting Seasons and Wheat Crops Importance. Jun 18, · I think instead of reading books it is better to gather information from the internet because a lot of information is available hdmobilsikis.ga is better you visit mansukh, religare or even india bulls because the information available is simple and easy to understand and you can also download reports from mansukh as it will help you out in properly Status: Resolved. Designed especially for traders looking to tap the profit opportunities of volatile markets.
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