Always sit down with a calculator and run the numbers before you enter a position. Infinity IT Park, Bldg. You square off options position when you want to close your existing position. Hello Karthik, I am a newbie just trying to get into the markets. Thanks for the kind words Rohit.
Strike Price Intervals: These are the different strike prices at which an options contract can be traded. These are determined by the exchange on which the assets are traded. These are determined by the exchange on which the assets are traded.
Top Brokers in India
Zerodha definitely has the advantage of low brokerage for its clients. Here are the rates for Options trading:. Aditya Birla Money is one of the underrated stock brokers in India.
One of the major reason is that the full-service stockbroker has not emphasized much on marketing the brand and the corresponding services it provides. Aditya Birla Money is known for quality research and tips and gives value-for-money service to its clients.
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 requires an understanding of the concept in the first place. Furthermore, if you need any assistance whatsoever, in finalizing a stockbroker for yourself or you need any advice on a recommended stockbroker, you can provide your preferences and details below:.
Your personal view on options trading is nicely planned out, Let me share this with my subscribers. Your email address will not be published.
Please enter an answer in digits: Best Stock Brokers for Options Trading With stock broking space moving towards a consolidating and a maturing stage, there are quite a few brokers in the industry with their own pros and cons.
Now, there are 3 possible scenarios from here: Hopefully, you were able to understand how Option trading works. High-performance trading platforms, specially equipped with multiple charting types to go along with inbuilt option strategies Reasonable brokerage charges Quick customer service for neat resolutions at the time of order placement and execution.
Free Demat Account If you are human, leave this field blank. Any Other Requirement please mention? Binary Today August 20, Reply. Add a Comment Cancel reply Your email address will not be published.
Trading Account Annual Maintenance Charges. Demat Account Opening Charges. Demat Account Annual Maintenance Charges. Trading Account Opening Charges. Depends on the State. 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? I guess you are talking about the new ASM margins, suggest you take a look at this thread — https: Dear Karthik, Sorry to bother you again.
Can you please let me know which is best and most reliable indicator for Volatility? Also how should I check the volatility, Weekly, daily or the timeframe that I use for my trading 60 Mins, 15mins or 5 mins chart. Let say I trade bank nifty or any individual stock using 60 mins timeframe but use 5 mins chart for entry and exit.
So should I check volatility on daily chart or 60 mins chart or 5 mins chart? Thank you once again for all you do for us. Really appreciate the time you give to all of us. Best regards Ron Kalra. You can read more about it here — https: Here is a quick recap of the history of the Indian derivative markets — June 12th — Index futures were launched June 4th —Index options were launched July 2nd — Stock options were launched November 9th — Single stock futures were launched.
Ajay wants to play it safe, he thinks through the whole situation and finally proposes a special structured arrangement to Venu, which Ajay believes is a win-win for both of them, the details of the arrangement is as follows — Ajay pays an upfront fee of Rs. Consider this as a non refundable agreement fees that Ajay pays Against this fees, Venu agrees to sell the land after 6 months to Ajay The price of the sale which is expected 6 months later is fixed today at Rs.
Do note, he is fixing a price and paying an additional Rs. However irrespective of what happens to the highway, there are only three possible outcomes — Once the highway project comes up, the price of the land would go up, say it shoots up to Rs. Scenario 1 — Price goes up to Rs. So how much money is Ajay making? Scenario 2 — Price goes down to Rs. Here is the math that explains why it does not make sense to buy the land — Remember the sale price is fixed at Rs.
Scenario 3 — Price stays at Rs. Agreed Ajay would lose 1 lakh, but the best part is that Ajay knows his maximum loss which is 1 lakh before hand. Hence there are no negative surprises for him. Also, as and when the land prices increases, so would his profits and therefore his returns. He would lose a lot of money if the land prices increases after 6 months right?
Well, think about it. The agreement is entered after the exchange of 1 lakh, hence 1 lakh is the price of this option agreement. As a thumb rule, in an options agreement the buyer always has a right and the seller has an obligation I would suggest you be absolutely thorough with this example. Let us now proceed to understand the same example from the stock market perspective. And they are- The stock price can go up, say Rs. Now that we are through with the various concepts, let us understand options and their associated terms Variable Ajay — Venu Transaction Stock Example Remark Underlying 1 acre land Stock Do note the concept of lot size is applicable in options.
So just like in the land deal where the deal was on 1 acre land, not more or not less, the option contract will be the lot size Expiry 6 months 1 month Like in futures there are 3 expiries available Reference Price Rs.
We will understand the logic soon Regulator None, based on good faith Stock Exchange All options are cash settled, no defaults have occurred until now. March 18, at March 19, at 5: August 5, at 3: August 6, at August 7, at 8: August 7, at October 25, at 9: November 17, at March 29, at 1: March 31, at 8: Raja Sekhar Puligadda says: April 22, at 9: April 23, at August 20, at 1: August 21, at June 28, at June 29, at August 25, at 5: August 26, at July 7, at July 8, at March 18, at 1: March 19, at 4: December 25, at 8: December 27, at 3: December 5, at 1: December 6, at March 18, at 3: April 5, at 4: April 6, at 6: May 17, at 6: May 18, at May 18, at 6: May 19, at 1: March 30, at 5: March 31, at 5: May 18, at 4: May 19, at March 18, at 4: March 19, at 6: March 20, at 4: March 20, at 7: March 21, at 7: July 22, at July 23, at March 20, at 3: March 22, at 8: March 21, at 1: March 22, at 5: March 23, at 4: March 22, at 6: March 23, at 1: March 24, at 6: April 18, at 7: April 19, at 3: March 24, at 8: March 25, at 4: April 18, at 3: March 24, at 1: March 30, at 2: March 31, at 4: April 13, at 1: April 14, at 4: April 28, at 8: April 29, at 5: June 2, at 8: June 3, at 5: June 10, at June 12, at 7: S Senthil Kumar says: July 1, at 6: June 30, at 7: July 4, at July 4, at 5: July 5, at 4: July 6, at 4: July 10, at 7: July 12, at 3: July 13, at 3: July 13, at 7: July 20, at 1: July 21, at 6: July 31, at August 2, at 5: July 31, at 1: August 12, at August 13, at 5: August 30, at 5: August 30, at 2: September 2, at 3: September 3, at 7: September 5, at September 6, at 8: September 16, at 7: September 17, at 6: September 20, at 7: September 21, at 4: September 20, at 4: September 21, at 5: September 21, at 6: November 18, at March 4, at March 5, at October 11, at 1: October 13, at October 21, at October 21, at 1: October 27, at 2: October 29, at 8: October 26, at 9: October 27, at 4: October 28, at October 30, at October 31, at 1: November 23, at 9: November 23, at November 27, at 6: November 27, at 4: November 28, at 4: December 17, at 4: December 18, at 5: December 22, at 4: December 23, at 7: December 23, at 6: December 24, at December 29, at 5: December 29, at 6: December 30, at 7: December 31, at 8: December 31, at January 1, at 5: January 1, at January 2, at 3: January 8, at 4: January 9, at 8: January 20, at January 21, at 5: March 4, at 7: January 21, at 6: January 22, at 5: February 9, at 6: February 10, at 3: February 10, at 6: February 19, at 2: February 21, at 2: March 20, at 6: March 23, at 6: March 21, at 3: April 19, at 7: July 3, at 7: July 6, at 6: Rama krishan reddy says: July 24, at 4: July 25, at July 26, at July 29, at 2: July 29, at 6: August 25, at 9: September 6, at 9: September 6, at September 13, at 5: September 14, at September 30, at September 30, at 1: November 15, at 9: November 24, at November 25, at 2: November 25, at 4: December 2, at 8: December 3, at December 4, at 9: December 12, at 3: December 13, at December 2, at 5: December 20, at December 21, at February 13, at 4: February 14, at February 15, at February 15, at 4: February 15, at 1: February 15, at 9: February 16, at 7: March 4, at 2: March 4, at 4: March 5, at 8: March 11, at 3: March 12, at 9: March 22, at March 22, at 1: April 10, at April 11, at 7: April 11, at 4: April 12, at 7: April 18, at 9: April 19, at May 21, at May 21, at 6: May 24, at 4: May 25, at 8: May 25, at 2:
1.1– Breaking the Ice
Trading Stock Options in India. The Stock Exchange for trading stock options in India is the National Stock Exchange. Instrument type on the SAMCO online trading platforms – OPTSTK. While trading stock options in India, clients must select the instrument type OPTSTK on either of . There are lots of reasons for this increased interest in option trading in India. Primarily, lack of returns in the cash segment due to a prolonged economic slowdown has . like futures, here in the options trading whether the buyer of the call option can exercise the option and exit before the expiry and book profits by selling shares in spot market OR have to wait till expiry. please clarify this doubt sir.