Option trading strategies in india pdf viewer
The time span can be as little as 60 seconds, making it possible to trade hundreds of times per day across any global market. This makes risk management and trading decisions much more simple. The risk and reward is known in advance and this structured payoff is one of the attractions.
Exchange traded binaries are also now available, meaning traders are not trading against the broker. To get started trading you first need a regulated broker account or licensed. Pick one from the recommended brokers list , where only brokers that have shown themselves to be trustworthy are included.
The top broker has been selected as the best choice for most traders. These videos will introduce you to the concept of binary options and how trading works. If you want to know even more details, please read this whole page and follow the links to all the more in-depth articles.
There are however, different types of option. Here are some of the types available:. Options fraud has been a significant problem in the past. Fraudulent and unlicensed operators exploited binary options as a new exotic derivative.
These firms are thankfully disappearing as regulators have finally begun to act, but traders still need to look for regulated brokers. Here are some shortcuts to pages that can help you determine which broker is right for you:. The number and diversity of assets you can trade varies from broker to broker. Commodities including gold, silver, oil are also generally offered.
Individual stocks and equities are also tradable through many binary brokers. These lists are growing all the time as demand dictates. The asset lists are always listed clearly on every trading platform, and most brokers make their full asset lists available on their website. Full asset list information is also available within our reviews. The expiry time is the point at which a trade is closed and settled. The expiry for any given trade can range from 30 seconds, up to a year.
While binaries initially started with very short expiries, demand has ensured there is now a broad range of expiry times available. Some brokers even give traders the flexibility to set their own specific expiry time. While slow to react to binary options initially, regulators around the world are now starting to regulate the industry and make their presence felt. The major regulators currently include:.
There are also regulators operating in Malta and the Isle of Man. Many other authorities are now taking a keen a interest in binaries specifically, notably in Europe where domestic regulators are keen to bolster the CySec regulation.
Unregulated brokers still operate, and while some are trustworthy, a lack of regulation is a clear warning sign for potential new customers. We have a lot of detailed guides and strategy articles for both general education and specialized trading techniques. From Martingale to Rainbow, you can find plenty more on the strategy page. For further reading on signals and reviews of different services go to the signals page. If you are totally new to the trading scene then watch this great video by Professor Shiller of Yale University who introduces the main ideas of options:.
In addition, the price targets are key levels that the trader sets as benchmarks to determine outcomes.
We will see the application of price targets when we explain the different types. Expiry times can be as low as 5 minutes. How does it work? First, the trader sets two price targets to form a price range. If you are familiar with pivot points in forex, then you should be able to trade this type. This type is predicated on the price action touching a price barrier or not. If the price action does not touch the price target the strike price before expiry, the trade will end up as a loss.
Here you are betting on the price action of the underlying asset not touching the strike price before the expiration. Here the trader can set two price targets and purchase a contract that bets on the price touching both targets before expiration Double Touch or not touching both targets before expiration Double No Touch.
Normally you would only employ the Double Touch trade when there is intense market volatility and prices are expected to take out several price levels. Some brokers offer all three types, while others offer two, and there are those that offer only one variety. In addition, some brokers also put restrictions on how expiration dates are set.
In order to get the best of the different types, traders are advised to shop around for brokers who will give them maximum flexibility in terms of types and expiration times that can be set. Most trading platforms have been designed with mobile device users in mind.
So the mobile version will be very similar, if not the same, as the full web version on the traditional websites. Brokers will cater for both iOS and Android devices, and produce versions for each. Downloads are quick, and traders can sign up via the mobile site as well. Our reviews contain more detail about each brokers mobile app, but most are fully aware that this is a growing area of trading. 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. Hi Nithin, Do you see end of retail trading in near future.
I am asking because I have heard that SEBI is trying to reduce 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? Arpit, what the article talks about is margin funding norms, basically where people borrow money to buy for stocks for a lot more than what they can buy with the money in their account. 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 is , and margin required is around 2. It is Rs 2. I have been 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.
Sir, I have a suggestion, Zerodha has branches in Southern Zone. In India 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? Hi, First 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 elections to make money. That is actually a wrong strategy. So the buyer usually makes money when there is something surprise.
For example, in , nobody 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 what happens next month. 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: 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 girls. 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, education 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 that matter even futures are also introduced for the purpose of hedging , but 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. Have you checked out http: Why IndiaVIX has risen by 13 vol points in the last weeks 2. 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 As I said, shorting 29th April VIX future would have made sense as in just a week span of time it has fallen from So, my forecast of IndiaVIX spot and its future levels turned out to be the absolutely accurate.
Given the spot level of IndiaVIX at At the same time, this is one of the most crucial events in the last 5 yrs, yet IndiaVIX is no where close to its highs of 50 level.
So, from risk-reward perspective, it makes sense to long 13th May VIX future. I still think it has more to go in the remaining 2 trading days, so I would advice to continue holding it. Thanks Nitin for your prompt response. What will be the impact of election result on these two stocks? This move might not be sufficient to make profit. On the other hand, if third party gains majority, market fall will be unstoppable. Fail to understand why is India VIX expiring on May 20, trading at significant discount to underlying.
It is around Hi, 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.
Hi Hi Sundar,I am very impressed with your comments,could you please guide me how to pick right strik price call or put for write option based on market trend and implied volatility. H, 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 close, your risk will be very high. So this is a game of risk-reward.
As you have already mentioned, implied volatility is the most 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 do not pay exposure margin.
The margin money that you pay for 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 that , there 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 diversified , using the wing strategy For eg, Nifty is trading around , one may sell Put and Call, but what I do, since I invest huge money, I sell , , , Put and , , , Call, I call this wing strategy , etc.
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. Thanks P R Sundar. Nitin-is it true that Zerodha exempt exposure margin.
If yes what should be lot size for selling 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. Otherwise you will end up loosing your entire wealth. Mr Kamath a quick question: Yes should drop proportionately, around 3lks https: 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 implied 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 Money on factors powerful pro. OptionBingo's StrategyFinder tool is a unique and state of the art tool for searching the best options strategies.
You can search options Trading involves. Buying the trainer of options market in kolkata and m also certified with NSE. Nse option trading strategies pdf. Options trading strategies pdf nse International trade and foreign exchange.