The other type of options defined based on the underlying are Index options. This is optiosn simple primer, however Options trading is a complicated subject and one needs to do significant research before jumping in Options trading. A buyer of Put options is taking the opposite position that the underlying instrument e. Reach us at StockFundoo rediffmail. I am holding this stock from a very long time. However, option selling is akin to hod insurance and hence is detrimental to an individual retail trader as the potential liability can be significant if volatility increases overnight. Thirdly, large scale selling by GDR holders, the foreign ownership has come down from
Powered by Fundamental Deep Value Investing and Technical Analysis Detailed Stock Analysis updated on a Daily Basis. Saturday, February 23, Simple Guide to Options Trading!. Question : I am interested in trading in Stock and Nifty Options. Can you please guide on how to be profitable in Options Trading. Answer : Options are a major trend in Indian Stock markets now, with turnover in Options category being significantly higher than that of Stocks, Index or Derivatives category. Just to take an example, on Feb, turnover for Index Futures at NSE was 7, crores, turnover for Stock Futures was 16, crores and turnover for Index Options was a whooping 87, crores.
So options have become an instrument of choice for Traders — both Retail and Institutional traders — in Indian Stock Markets. As our Finance Minister remarked recently, Indian markets are primarily non-delivery based, meaning majority of trades do not result in deliveries and are stpck settled. Options in Indian market are cash settled as well with no delivery taking place at the option expiry date.
Simply speaking, an option is a bet on direction of sock the underlying Index e. Nifty or a given Stock. When a trader is taking a position in Options, he is either buying or selling an options contract, and is making a bet that either the underlying instrument will rise in price or fall hwo price before the monthly expiry date. Obviously, if the direction is predicted accurately, the trader stands to hold a profitable position, which he can close at or before the expiry date.
Options are basically of two types — Call Option and Put Option. A buyer for a Call option is taking a position that underlying instrument e. A buyer of Put options is taking the opposite position that the underlying instrument e. However, there are few more things to keep in mind, before you jump in Options trading.
One should be aware of the strike price and days remaining before expiry as well. Options decay in value calculate cost basis of stock options their price is dependent on variable known as Theta, which is also known as the rate of decay. Simply speaking, if you are an options buyer, your options will lose a little bit opitons value each day, even if the underlying instrument is optiond moving at all, due to time decay.
Due to this reason, professional traders or large institutions are biased towards options selling, rather than options buying, as they can benefit super scalper 1 minute system forex this time decay if underlying instrument is not moving at all.
However, option selling is akin to selling insurance and hence is detrimental to an individual retail trader as the potential liability can be significant if volatility increases overnight. Another way to benefit from options is to take a combination trade in Options. A trader expecting the Stock or Index price to change dramatically in next few days can buy an Options Straddle. A long straddle involves purchasing both a call option and a put option on same stock or Index hkw the same strike price and expire date.
For example, if Infosys is coming up with its quarterly results and investors are not sure whether it will be a positive result or not, one can buy a Call option and Put Option at same strike price, preferably closer to current stock price. If results are good, Call options would rise in price and would make up a profitable trade, else if results are less than expected Put Options how to trade indian stock options result in profits for the trader.
Another simple way to trade in options for a trader already holding a stock is to execute a Covered Call. This strategy has stick be adopted in bearish markets for stocks which are not expected to rise in price. If a trader is holding a stock in cash segment, he can sell the corresponding Call options for the stock. When the stock declines in price as expected, the call options would be worthless and seller of Call options would get to keep the option premium which he received while selling the Call Options.
If the stock goes up, since the trader is already holding the stock in cash market, he would get compensated with the price rise of his holdings. This is a useful strategy for slightly bearish markets. This is a simple primer, however Options trading is how to trade indian stock options complicated subject and one needs how to trade indian stock options do significant research before jumping in Options trading.
With the high Options volumes witnessed lptions Indian markets, Options trading is much more coveted than cash trading or Futures trading and here to stay for tradee. Award Winning Data Feed. New StockFundoo App for Your SmartPhone or Tablet! StockFundoo Dark Horse Portfolio! Got a question for us? Reach us at StockFundoo rediffmail. Simple Guide to Options Trading! How does a housewife make money in stock markets?
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Options Trading for Beginners India
Learn how to trade options in India, These options strategies are created by combining various Stock or Index options available for trading in stock exchanges. How can I trade in call options and put options in the Indian stock market? What are the trading strategies of FIIs? How do they trade in the Indian stock market?. How can I trade in call options and put options in the Indian stock market? Trading Stock Options in India. Call Options and put options are financial.