Best Option Trading. Strategies for Indian Market. Your handbook for Option trading strategies with plenty of case studies and examples “The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading I know this will sound like a cliché, but the single most important reason that people lose money in the financial /5(17) WINNING STOCK & OPTION STRATEGIES DISCLAIMER Although the author of this book is a professional trader, he is not a registered financial adviser or financial planner. The information presented in this book is based on recognized strategies employed by hedge fund traders The Bible of Options Strategies, I found myself cursing just how flexible they can be! Different options strategies protect us or enable us to benefit from factors such as blogger.com Size: KB
Best Option Trading Strategies for Indian Market by Moonmoon Biswas
Options Trading is a form of contract that gives you the right, to either buy or sell an amount of stock at a pre-determined price. But you are not obliged to buy or sell the stock. Shyam is looking to buy a Rs. There is a likelihood of a mall coming up in the next five months which will drive the real estate price higher to Rs. Shyam wants to buy the flat but does not want to pay more. Ravi gives Shyam an option the right to buy the flat at Rs.
Shyam gets the right to buy or not to buy the flat within a period of five months and Ravi is bound by the contract to sell it only to Shyam. If the mall comes up and the flat prices increase to Rs. In case the price falls to Rs. But he loses only the upfront money. Option trading strategies in india pdf the case of real estate, the strike price was 30 lakh. You can buy any underlying instrument such as stock, commoditiesindex, or forex for the option trading in India. Options trading is also known as derivatives trading because the options contracts derive its value from the underlying instruments.
Buying an option that gives you the right to buy shares before the expiry date is called a Call option. Whereas buying an option that gives you the right to sell shares before the expiry date is called a Put option. Options give you the power to buy a higher number of shares for a small amount of money called premium in comparison to buying a stock, option trading strategies in india pdf.
For example, you can buy 1 call option contract of Reliance by paying Rs. A reliance call option with a strike price of Rs. You need Rs 1,35, to buy an option for option trading strategies in india pdf. To trade option trading strategies in india pdf you need to have a trading account with any of the top stockbrokers like Zerodhaor Upstox. Options contracts are cash-settled and there is no delivery of underlying instruments.
That means you do not require a Demat account. A trading account linked with your bank account is sufficient to trade-in options. Trading in options is done in lots. A single lot size contains a fixed number of underlying instruments. For example, 1 lot of Infosys call or put options has number of underlying Infosys shares. Full-service stockbrokers charge Rs. Whereas, discount brokers charge a low flat Rs, option trading strategies in india pdf.
Here is a step by step trading account opening process. Option trading involves a higher amount of risks due to the large number of underlying instruments and volatility. Option trading strategies in india pdf buying options contracts you may need a small amount that is equal to the premium amount multiplied by the underlying contract value.
For example, to buy 1 lot of Bank Nifty Call options that has an underlying value of 25 and currently premium trading at Rs. But, for selling options contracts there are exchange stipulated margins requirements based on the volatility of the underlying instruments that are higher in comparison to buying options.
In general, you need to keep at least Rs, option trading strategies in india pdf. There are at least call options available on a particular stock. For example, the Asian Paints stock shows the following call options contract with different strike prices, option trading strategies in india pdf. And an equal number of Put options are available for trading.
Generally, the options having strike price near to the current stock price is the most liquid. However, to select the most liquid options for trading intraday you can take the help of Option trading strategies in india pdf India or MoneyControl who list the details of most active option contracts.
You can do either day trading or positional trading in options depending on your trading strategy. You need to have a view of the particular stock and trade as per the price action.
You have charting tools and indicators to help you do technical analysis and trade as per your strategies.
The option positions are built after taking a view on the particular index or stock. Here multiple options are used to restrict the loss. For example, if you are bullish on the Bank Nifty and expect a moderate rise in the price, option trading strategies in india pdf you can take the Bull Call Spread position strategy.
With a bull call position, you are locking your upside profits and downside losses till you hold the position. The maximum that you will lose is the entire premium that you have paid while buying the call. Here you need to make sure that both the call options should have the same expiry.
Building such option positions and strategies takes time and calculation work that may be hard for you at the beginning. To make things easy you can try the Sensibull platform that gives you strategies based on your views. Sensibull provides all the cash flow details and the capital required for a particular strategy so that you know your option position clearly.
Open interest is the number of unsettled or open contracts of a particular option. OI does not indicate downtrend or uptrend, but you get fair indications about the strength of a particular trend. Increasing open interest indicates fresh buying or rising interest in that particular option contract and sustainability of the existing trend.
Whereas, a declining OI indicates a weakening of the existing trend. The put-call ratio measures the trading volume of put options vs call options. The changes in the put-call ratio help in understanding the sentiments, option trading strategies in india pdf. When there are more puts than calls, i.
Similarly, when the call volume is higher than put volume making the PCR ratio less than 1, then you have more bullish participants. However, you should not rely solely on the PCR indicator because hedge fund managers often buy put options contracts to hedge their portfolio. In such a scenario the PCR ratio will be above 1 indicating a bearish market, which may not be the actual case. The Intraday Momentum Index is helpful for high-frequency option traders looking to trade aggressively on intraday option price movements.
IMI combines the candlestick analysis along with the RSI Relative Strength Index to provide insights for intraday trading. You get to know when the option is overbought or oversold. IMI indicator levels over 70 indicate overbought conditions ripe enough to initiate a sell trade. Whereas, IMI levels below 30 indicate oversold conditions where you can enter a long trade.
However, when the prices are in uptrend or downtrend then the indicator will constantly indicate overbought or oversold conditions. The Relative Strength Index is a plain momentum indicator that helps you determine the overbought and oversold conditions.
RSI compares the magnitude of recent gains to recent losses. RSI values also range from RSI works best for options on individual stocks, as compared to indexes because stocks reflect overbought and oversold conditions more frequently than indexes, option trading strategies in india pdf.
You can enter a short call or a long put trade when the RSI shows a value above 70 overbought conditions. When the RSI is below 30 oversold conditions you can buy a call or sell a put option.
The Bollinger Band is made up of a set of three lines where the middle line is the simple moving average of the last 20 candles price. The upper and lower lines form the option trading strategies in india pdf on either side of the middle line. The upper and lower bands are 2X standard deviations from the middle line and indicate the overbought and the oversold zone. When the price moves outside of the bands, option trading strategies in india pdf, then the option is ready for a potential reversal.
So, if the breakout is above the top band, you may initiate a long put or a short call position. You can sell calls when the red candles re-enter the upper band and tend to move lower as shown in the chart above. When the breakout is from below the lower band you may take a long call or short put as shown in the chart below. Note — That the above strategy does not work when the prices are moving upward up-trend or downward down-trend sharply.
You need to wait until the trend gets over. There are hundreds of positional strategies that can be built on options based on your views. If you want to know about other strategies then you can use the Sensibull platform. The platform is dedicated to options trading and helps in quickly creating strategies just by entering your views option trading strategies in india pdf the option you want to trade. Login into your online trading account using the ID and password provided by your stockbroker.
For trading in options, you need to have at least Rs. Check the prefilled bank account details and select the payment mode UPI or net banking. Find the most liquid option trading strategies in india pdf that you want to trade using the NSE India or MoneyControl website as mentioned earlier. Next, you need to create a watchlist where you can keep track of the option that you have selected for day trading. On the left-hand top, you have the search option, where you can type the option name.
For example, you can type BHEL JUL 45 for the stock option of BHEL shares. Immediately you will get the options with the specified strike price Click on the market depth tab and you will get the live BID and ASK quotes and the trade details. The left-hand side prices in blue are the buyers with the call premium prices indicated and the right hand are the sellers with the indicative call premium prices.
To buy a call option for intraday trading click on the blue B button and to sell click on the orange S button. Select the MIS radio button for intraday trading.
Adjust the quantity and choose the market option to buy the option at market price. On the order form select the MIS for intraday trading and fill in the quantity and the limit price at which you want to place an order.
100% Profitable Option Buying Strategy with proof !!
, time: 8:08Step By Step Guide On Options Trading in India Indicators, Strategies | Cash Overflow
Selection of Option strategy Price of Maruti Suzuki India Ltd expected to go up moderately in the near term; therefore investors have an opportunity to use any of the following option strategy to book profit / hedge risk: a) long call option b) naked put option, c) bull put spread 3 Preface The National Stock Exchange of India Ltd. (NSE), set up in the year , is today the largest stock exchange in India and a preferred exchange for trading in equity, debt and derivatives instruments by investors. NSE has set up a sophisticated electronic trading, clearing and settlement platform and its infrastructure serves as a role model for the securities industry The Bible of Options Strategies, I found myself cursing just how flexible they can be! Different options strategies protect us or enable us to benefit from factors such as strategies
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