Actually I have one normal trading account with sharekhan right now. Our business model is around offering an efficient trading platform. Zerodha is a low cost brokerage, they can not afford to waive exposure margin. Are you a Foreign national? If I hpw to trade with Zerodha-can I use the same PIS account?
We at Zerodha as usual, will be offering you trading tradig this new product for free trasing June 1, Following is our attempt to simplify trading on India VIX for you. I have taken the help of the NSE module on VIX, and from Akhil Bansal. Tech from IIT Delhi, an MBA from Tracing Ivey, and Founder-CEO at Indianvolatility. CBOE was the first exchange in the world to compute a volatility index back in With the increasing popularity of option trading in India, and since India VIX is designed similar to the CBOE VIX, we should be seeing a similar trend in trading activity on the India VIX contracts in the coming years.
India VIX is a volatility index based zedodha the index option prices of Nifty. It is computed by using the best bid and ask quotes of the out of the money, present and near month Nifty option contracts. We will not get into the tradinh mathematical formula used to calculate the India VIX, but here is how you interpret VIX. For example, if India VIX is optino From the Black-Scholes model we know that options price increases with increase in volatility and decreases with how to do option trading in zerodha fall in volatility if everything else remains same.
Currently, the only way to trade volatility is by buying or selling options calls or puts as may be the directional bias of the market. Downside of this approach is that in the real world all other things like time decay theta factorstock price delta factor do not remain constant while volatility is moving. So it becomes hard for a trader to purely trade the volatility with options.
Using the India VIX such a volatility trader will zerodhx a able to trade much more efficiently. If you look at the India VIX historical data, it is an easy observation that it is not a trending data series but rather an oscillating data series range has stayed between 13 and One such good oscillator to use would be Bollinger Bands.
See the chart below for India VIX, and how India VIX has reversed most of the times it has touched either the upper or lower end of the 20 — day Bollinger Band. If you are a technical analyst, you can use other similar oscillators for predicting the move of the India VIX. Love playing poker, basketball, and guitar. Nitin Thanks for very well explanation….
Off lately as Election Commission has announced the elections dates and RESULT day, most of us must be thinking how to how to do option trading in zerodha VIX or any other trading instruments during the election. Now question arises…which one is best? So one can consider buying of VIX at least one week before the election result announcement.
Since these contracts expire weekly one has no option than buying the nearest week expiry! But I am not sure if we can square it off on the Election Day as there may many circuit filters!!! Squaring off next day which will be Monday may result in loss if VIX goes down zerocha. But I assume zerodba VIX will remain high for at least some time. One week before election result or two weeks before? I assume VIX is going to increase a lot from beginning of April and one has to time buying the options at right time.
Any past experience from GURUS? Given all this Banknifty still remains lucrative as it is going to zoom more than Nifty 1. VIX is a direct play, but the limitation would be that the longest contracts are just 3 weeks old, so if you have to play for the election results from May 16, you can start taking positions only from last week of April. If you look at the VIX historical chart, the range has been 13 to 30, but during the election it had spiked upto 60, so if the play is volatility even if VIX is available to be bought at around 30 3 weeks before the event, though it would traving on the high end of the range, it might still be a good bet.
Definitely better to be in options than futures. If you check out the May option prices, the premiums have already factored in extremely high volatility. Long strangle might be a good bet, if you are expecting extreme volatility, buy OTM calls and OTM puts. Another strategy could be that since so many people are trying to play volatility, and since premiums optioh so high, you tradinf also simultaneously run a bear call and bear put spread.
Sell ITM option, hedge it by buying an OTM option. You can do it on calls and puts at the same time. Is it better to do long strangle now or wait till end of April…. I mean it would be cheap now or then…I understand there are many factors that will play significant role into optoon such as time value of option and volatility.
But any idea from previous Election data? I think the best bet would be to wait as close to the event as possible and then take a strangle, 3 to 4 weeks before the how to do option trading in zerodha. That has historically been tradingg best time to take strangles around the election. This time around, with the increased popularity of option trading, everyone is trying to play the volatility game, and somehow my gut says that this time around there may how to do option trading in zerodha really be that much volatility around the election.
I had been doing my research on long strange strategy and decided to study about VIX. Thanks a ton for sharing your practical experience on the topic. There are number of valid strategies that you can play with as already discussed here but I would like you to note that last date if polling is 12th May monday and result day is 16th may friday. Exit poll results will come out on xo itself.
So you need to pay for exit poll results day and not results days as you have been stressing in your post and it will make a lot of difference. Recent assembly polls in Dec saw a lot of spike in volatility and it died down on 5th dec itself even though results came out on 8th Dec. Optuon one other strategy you can consider is go short on volatility on 12th May if you see volatility REALLY running up during election Nithin is skeptical of volatility rise.
This way you will be more sure and also not loose due to big theta of long strangle kind of strategy. Weekly Contracts much difficult to handle…. VIX the word itself is so complicated, but you have explained it in a very simple and effective manner. I am very excited to trade. Anyone who needs to read this article to understand VIX futures should stay away from trading them.
They are inherently complex instruments and the primary purpose of trading them should be to negate the beta of your portfolio. Do not be fooled into trading them as easy money. Do you see end of retail trading in near future. I am asking because I have heard that SEBI is trying to optiion margin it means do we need to have atleast half of the margin to trade Nifty Future in future.
I think it will kill the market…what do you feel? This has nothing to do with the futures trading business. There is no concept of margin funding when trading derivatives. Yes decided, the lot size isand margin required is around 2. Margin required is updated heresearch for INDIAVIX. It is Rs 2. I have optino prepping to develop a simple options trading system. And how do I back test option strategies?. Kindly throw some light on this. Yes Shankar, Presently as explained in the post above, we have only VIX future contracts, options contract might be introduced in the future.
I am new to stock market. I want to read the fundamentals of stock trading. Can you pl guide me the right material to understand the basic concepts. A good way to actually start trading I am saying trading not investing is by using technical analysis, a lot more easier to get started. In Opyion with increase in awareness about financial markets in public, it has become indispensable to enlarge the knowledge horizons about financial markets.
It would help the masses to acquire skills in financial field as well as to have optimum leverage of the available opportunities and skill-oriented labs in achieving their goals of investment. We are not really looking at expanding physically, but we are trying our bit to educate via various online initiatives.
It is seen in your website that Zerodha has launched automated trading in the year Can you pl brief me about automated trading regarding its operation, technical analysis etc Automated trading is not allowed for a retail trader. Can you pl brief me about automated trading regarding its operation, technical analysis etc? Ro let me introduce myself, I am Sundar from Chennai, trading only in options and making lot of money, at least Rs 10 lakh a month. Second, let me appreciate your effort in making low brokerage venture a reality.
Third, everybody want to buy options ahead of aerodha to make money. That is actually a wrong hrading. So the buyer usually makes money when there is something surprise. For example, innobody expected Congress coalition to get majority without Left support, that happened, so the markets shot up, option buyers made money. You may check, option prices for May series onwards are really very high. Assuming that one buys May series Put and Call, he has to pay Rs He will make money only when Nifty crosses or fall below Let us see how to do option trading in zerodha happens next month.
For option buyers: Option buyer pays only premium, option seller pays margin money which is very high. Option buyer has limited risk, seller has unlimited risk. So think basically why should any body want to be on sell side with everything is favorable on the buy side? The answer is simple. If you want high profit, you have take high risk Example: robbing a bank, your investment is very low, your reward is very high and correspondingly your risk is also very high.
If you want high reward without corresponding high risk, then also it is possible, but the probability of winning is very low. Example: Buy lottery ticket, your investment is only Rs 10 or 20, you may get Rs 1 crore if you are lucky, no risk absolutely, but probability is very low. So, the fact is that the probability of seller winning is very high. I have not seen anybody making good amount of money consistently by buying options. I am a living example for making money consistently by selling options.
What I mean to say, the amount of money which you are prepared to loose completely, only must be deployed in buying options. Last but not the least, option seller has the advantage of hedging his positions and can continue to apply delta hedging in order to come out if market goes against him. Option buyer has no options if his views go wrong, except getting out with stop loss. Hope option buyers understand all the risks involved. You want to get married. You have two how to do option trading in zerodha. One, beautiful, well educated and has lot of money.
The other girl is ugly, not educated and very poor. Which girl will you choose? A common sense will tell you that every one will choose the first one and nobody will choose the second one. Come to option buying and option selling. Option buyer has limited risk, unlimited profit and low margin money like beauty, bt100 trading system and money all three working in buyers side.
Then logically everybody should be on the buy side and no one should be on the sell side. But the fact is that for every contract buyer there is one contract seller. This equality is in amount not the number of people people may buy options but one person will sell the equivalent options. Let us rob a bank, investment is very low, reward is very high, but corresponding risk is very high, if you are caught you will be spending rest of your life in Jail.
You buy a lottery ticket, risk is limited to Rs Reward can be as high as Rs 1 crore. But what is the probability? It is very low. But people are aware of that. This is why most people do not buy lottery tickets. But buying of options is the same. But people do not realise this. Against lottery ticket awareness is created, some states like Tamil Nadu even has banned the sale of lottery ticket. On the other hand brokers make big money out of these people and make sure that these innocent people do not get any awareness.
Options are introduced for the purpose of hedging for opgion matter trding futures are also introduced for the purpose of hedgingbut being used by people for gambling. At the very outset,kindly excuse me for taking your precious time to read this note in your busy schedule. Shorting in current scenario after hiking of lot size by sebi ,will it b a smart choice? Had recently answered this query, check this video.
Yeah, tape reading is essentially looking at market depth window and price and trading. Why IndiaVIX has risen by 13 vol points in the last weeks. Now, do you think shorting the IndiaVIX future 29 Apr expiry make sense given the future is trading at So, you are protected till the spot level rises to Traring I said, shorting 29th April VIX future would have made sense as in just a week span of time it has fallen from I said so as my model predicted IndiaVIX spot level of 35 by 21st April and thereby the fall in the IndiaVIX levels.
So, my forecast of IndiaVIX spot and its future levels turned out to be the absolutely accurate. Now, I want forex requotes know your view on the 13th May expiry VIX future, which is trading at Given the spot level of IndiaVIX at At the same time, this im one of the most crucial events in the last 5 yrs, yet IndiaVIX tfading no where close to its highs of 50 level.
So, from risk-reward perspective, it makes sense to long 13th May VIX future. Personally I think long VIX 13th May is a trade that I might take personally, but not sure if I would hold it till the event. So, I was right on IndiaVIX current level I still think it has more to go in the remaining 2 trading days, so I would advice to continue holding it. Premiums of NTPC and Coal India seems to be okay when comparing with other stocks. What will be the impact of election result on these two stocks?
This move might not be sufficient to make profit. But stocks from particular segments like Infra, Bank, PSU and Power would make a rally due to zerodja reform plans. On the other hand, if third party gains majority, market fall will be unstoppable. It kption around India VIX was trading around 15 few months before. VIX shot up due to election. Election results will be announced on 16 May. By 19 May, the results will be fully priced in the market.
So volatility is likely to go down drastically by 20 May. It is a contract that requires a margin of around 7 lakhs. Still people are ready to short at 10 points lower. So they are informed people who take calculated risk. Hope the India Vix spot price may not cool to 2x. Hi Sundar,Could you please suggest me how to pick right strik price call or put based on market trend and implied volatility for write option. Prakash Hi Hi Sundar,I am very impressed with your comments,could zfrodha please guide ih how to pick right strik price call or put for write option based on market trend and implied volatility.
Choosing the right strike price is the skill required by the trader. You go too long, your return will be very low, if you go too how to do option trading in zerodha, your risk will be very high. So this is a game of risk-reward. As you have already mentioned, implied volatility is the grading important thing to consider. In addition price movement, time value also to be considered. Option buyers are gamblers, they invest a small amount of money, if they loose, they loose only a little, if they gain though probability is low they get huge profit.
Option sellers are business people, they expect a decent return for their investment. Most option writers have agreement with brokers so that they ddo not pay exposure margin. The margin money that you pay how to do option trading in zerodha writing an option consists of two margins, one span margin and the other one is exposure margin. So most heavy traders pay only half the money when it comes to selling options, compared to normal retail investors, so their return doubles.
Hence they can reduce their risk and yet can get good return. So there is no fixed formula to choose the strike price if there is any, by this time every one would have been following thatthere are a number of other factors like doubling your return by making the broker to agree for exposure margin waiver, diversifying not selling options only in one counter, sell in many counters so that your risk is diversifiedusing the wing strategy For eg, Nifty is trading aroundone may sell Put and Call, but what I do, since I invest huge money, I sell,Put and,Call, I call this wing strategyetc.
For your kind information, I have made Rs 1 Crore in the month of May, considered to be very difficult month for option traders due to election results uncertainty. For any clarification, you may contact me at ashwin95 gmail. P R Sundar Nitin-is it true that Zerodha exempt exposure margin. If yes what should be lot size for tradinng options on Nifty. Zerodha is a low cost brokerage, they can not afford to waive exposure margin. If you do not know what is the lot size for selling options on Nifty, I would advise you to stay away from selling options.
This is a high risk game and only knowledgeable people should enter. How to do option trading in zerodha you will end up loosing your entire wealth. Mr Kamath a quick question:What will be the Margin required for INDIAVIX, after the revision of Market Lot from to ? Reduction in Market Lot size will reduce the Margin requirement for trading INDIAVIX or not. Could you please explain what is delta hedging in option writing and how to use it practically? Delta hedging is all about creating balance in hedging positions.
It is difficult to explain here in the blog everything. We conduct one day workshop to explain all these. Hi,I want to know that the dp volatility which is used in calculating price of nifty options is same as this VIX? When i use the implied volatility as And when i calculate implied volatility putting call option price as 54 than it comes as I generally write nifty options so this factor to be exact is very much important for me.
All options have different volatility…like in your example the option volatility for call option is This will give you further insight in options. It is freely available. In Back office, noticed some thing wrong in the options turnover calculation. Can you just verify? I did 4 option trades in one of my account. FYI, the following trades i did. Check this link on how we are calculating turnover. This is the most compliant way of calculating turnover. But, options player would easily reach lakh turnover though they do very less.
I am going to eliminate options trading to avoid the auditing. Why there is no trading in India Vix? I checked the 22nd April NSE Bhavcopy and it does not have any volume for all the 3 contracts. Is this open for trading for retailers? Optio it is open for trading, but somehow is not getting any trading activity. The interest has been continuously dropping in this contract. Thanks Nithin for your prompt reply.
And thank you for this detailed article on Indiavix. I found it quite helpful. So Is their any index to identify volatility of commodity market? No index for commodity. Yes you can look at India VIX and typical stock options startup the market expectation of volatility — both for Nifty Index and individual stocks. Have a question with regards to order placing. Hmm that zerodya your making incorrect statement in General.
ICICI, Sharkhan, Kotak supports it. I have done trading at ICICI as well as sharkhan. VJ they are not really Good till cancelled orders, GTC orders ideally have to stay on the exchange servers until they are cancelled. So it is like a hack, and not really GTC. We are also looking at doing something similar to this, but it will not really be a GTC order. To check one min or 5 min or 10 min or daily chart of INDIAVIX volatility index. In the contract selection dropdown, choose NSE — Indices — Indiavix and add it to the chart.
Is India VIX available to trade in the forms of futures only? Secondly it is understood from the comment above that if it reaches 22 level…nifty will lilely to move upwatds so buying call option or selling put option will be the two possible scenarios. And if VIX reaches around 15, buying put or selling call will be the two ways. Even futures contract has become illiquid. If India VIX is above 22, then markets are likely to go up and down in an unpredictable manner but eventually markets will go ih.
So selling Call option on every rise should be the right strategy. If India VIX is below 15, then markets will be stable and likely to move higher slowly. So the right strategy is to sell Put option on every tradibg. Buying of option is only for very short term traders who can judge the market movement. Usually people who buy options and hold until maturity will loose money most of the time.
But risk associated with buying of option is very less and correspondingly the chances of winning is also very low. Selling of options carry unlimited risk, but if you know how to manage your risk and if you have more capital, teading can make decent return. You need more capital to sell options as you are required to pay margin money as well as Marked to Market MtoM losses. Whereas if you are a buyer of option, then just pay the premium and that is it.
But option seller wins most of the time and loose lot of money when loosing if does know how to manage the risk. Read from the start, especially the volatility basics. Because in the buy or sell window a good deal of space is available to add this margin calculations. As the available funds for each segment for each user is accessible from with in the individual user account. If you put the margin calculation or calculator to each user account then zeeodha user can easily calculate how much they can trade for each segment with out moving out of kite and can make quick decisions on what to trade and how much to trade.
Hope you under stand my suggestions. Vismadev, your suggestion in our list of things to do. Actually something cooler than what you are asking for. But one thing I am sure of a that a good number of people do trade in the stock market in these areas both in intraday and delivery trades. As most of them are not accustomed with online trading advantages. As this existing sub-brokers are more inclined to be a sub-broker rather than they becoming a client of Zerodha.
If I want to buy an option, I would want to buy it when the volatility is low. So how do I decide if it is justified to enter into the trade, ignoring other things as of now time, direction etc. For eg Implied Volatility for CE is 8. My trading account id is DP Till recently I only had trading account with zerodha but in the month optioh december i got zerodha demat account but the problem with the demat account is that i am not able to do BTST and the stock comes in my account after 4 to 5 days due to which i am losing.
When i emailed at support zerodha. And your hyderabad office guys they have no clue that i have two demat accounts linked to my account and they say that everything is fine with my account. Sorry for the inconvenience. As a Business policy, ILFS processes all zerrodha closures after 10th. I find this is the best article on the internet. Zerodha is the best Broker according to every view.
Could you please guide me how to do this. You will need to transfer all the shares from your indiainfoline demat to Zerodha demat. Hi, vix has to be created in realtime for Nifty future and traded in intraday. We see your request received at 8. This link gives IV only for today:. Please let me know the process. You can use Pi our desktop for this.
Btw, there is no trading that happens on Indiavix currently. Has India futures stopped trading? Are there no options for VIX? Hi Just to inform you that there are some unauthorized trades are happning in my account knowledge plz solve urgently Namit, Can you send an email to support zerodha. Charting, Coding and Backtesting.
Zerodha Trader — Charting. Zerodha Trader- Software Version. Zerodha — 60 Day Challenge. Winners — 60 day challenge. Zerodha in News — Headlines. Zerodha in News — Quotes. Trading Optioh VIX — Simplified. Popularity of CBOE VIX Contracts NIFTY vs India VIX Yearly Range of VIX for last 4 years India VIX and Bollinger Bands. February 13, at pm. March 6, at pm. March 7, at am.
November 17, at pm. March 7, at pm. February 15, at am. February 20, at pm. February 21, at pm. February 27, at am. March 3, at pm. March 12, at am. March 24, at pm. March 29, at pm. March 30, at pm. April traidng, at pm. April 25, at pm. P R Sundar says:. April 4, at pm. November 14, at pm. November 15, at am. April 8, at pm. April 3, at pm. April 13, at pm. April 27, at am. April 27, at pm. May 10, at pm.
April 28, at am. May 2, at am. May 6, at pm. May 7, short squeeze trading system am. May 27, at am. June 1, at am. June 2, at am. June 29, at am. June 25, at am. June 25, at pm. June 27, at pm. July 18, at am. July 18, at pm. October 31, at pm. November 1, at am. November 3, at pm. November 4, at pm. April 23, at am. April 23, at pm. May 27, at pm. May 28, at am. May 28, at pm. June 1, at pm.
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Pledging Stocks to trade futures and options with Zerodha
A nice HTML5 trading app built with speed, simplicity, and ease of use in mind.