How to trade in nifty options examples

Use this tool to help setup option strategies, study the payoff graph and proft trading options at Zerodha. Zerodha SPAN calculator to know the exact margins required. But do check this post, explains how STT charged is so much more for in the money expired options, it is best to square off all options that have any value to it in the market on expiry day. If I have 1L in my trading account, can I do the following option method. Long calls and short puts, ideally will make you profit when market goes up, but they are completely different in terms of how you make money and similarly with long puts and short calls. Someone will get back to you asap. Last is basically the last traded price and best is basically the best available price. Pls confirm at earliest. Sir, I would like to know if I buy 5 lots of Nifty 7600 PE at 27. In the case of Weekly Option in Bank Nifty, Is it an American option or European.

Am I right or wrong in calculation. This would save lot of headache and would make us more efficient. PNL, If you are using short options or any method where there is a maximum profit potential, it will show in PNL. What happens to the value of option on expiration date? Net premium paid is shown and not profit potential. But after going through your derivative modules again and again I have learnt a lot specially your shorting OTM call options. For example Nifty 7500CE was trading at around 200 in morning.

Similar to how you placed a buy, just place a selling order at whatever price. SO, in order to take benefit of the method for reducing the margin what should I do first. For taking 3 such positions, you will need 45k in your account. Could you tell me where is it located in that page? Rs 5000 in premium, the maximum you can lose is Rs 5000. How to check the profit potential? IT for last 25 years and dont give me such stuff. Is it possible to watch option chain in 1 click in Kite.

Does it becomes completely zero. Please tell if my thinking is correct. This suggests me 5 different strategies as shown in the pic below. PnL on last and best, both seem to be giving the same result. Confused with your question Praveen. Please resolve the above two at the earliest. Pi, Kite, trade and nest, none of them are working and after several communication with your team, they have accepted that kite is not working.

It works on Pi, if you are not able to see this, can you update the latest patch of Pi. These features are provided by other brokers trading plat form. Whether option method can be created on the day before expiry or even on the day of expiry. As it is going up, remaining 60k keeps reducing? Today it closed at 77. When you buy calls, profits are unlimited but the risk is limited to the premium you pay. Let me explain, if you buy Nifty 8500 puts at Rs 100 on say Aug 1st, you can sell it immediately, next day or any day till the expiry day of the contract. If nifty closes at 8450, 8500 puts get exercised and u get Rs 50 for those puts. Kindly advise me when options method can be created and traded in the current month. Thanks in advance and great work with Pi. SPAN calculator where you can mention your trade and it will automatically let you know the NSE stipulated margin requirements.

Thanks Nitin, If you give time say next day I can add margin, also would like to know more about opening an account. Hello sir i want to ask one question. You can Short puts, when market goes up, put values will come down and hence if you are short puts you can profit. Now, when such things happens, who is responsible for all the loss of money occurring to customers? Once option method is created is it possible to square off the method when our target is reached. However, there is no details available when I am trying to calculate the margin requirement using the Zerodha Margin calculator. Can you help me for the same?

Buy Nifty 7800 put 1 lot. How to add my own method, if not available now, please make it available soon. Ramesh, you can do it 2 ways. Finance minister announced in the budget in February that MCX commodity options will be launched and I am sure you guys are not ready as usual. We will be providing more than option chain related to options in coming months, but these will take more time. So to have profit shall i buy call or put option?

SPAN margin in your account, the positions will be squared off. If that is for intraday, how much should i have to carry til expiry? AM but till now no response even support ticket is not generated. Next day morning how much will I have in my wallet? Go to Admin positions and click on the open position and say square off, this will sell it at market. If you are buying options, you rather use NRML as there is no additional margin you get by using MIS. Nifty 8000CE if i want to buy at the open and fill the order immediately. PUT a new contract or excersicing means I bought it and sold it as well. For holding a future position, you would need NSE stipulated margins which would work upwards of Rs 25000 based on what future contract you are trading whereas in options a trader with even Rs 100 in his account could take some kind of an option position.

Option writers may not necessarily own the asset but they still take on the obligation to deliver the asset if the conditions are met for which they receive a small premium from the buyer of the option. New Zerodha account holder. Now convert all of them to NRML, this way u will be able to get into the method with lesser margins. If it closes above, it gets expired worthless. Margin required for only writing 12200put per lot is Rs 22581. Once you give a view the tool will suggest you 5 different strategies, as shown below. Login to ZT and make sure you launch plus while logging in. MIS is getting squared off automatically, there can be an impact of upto 1 point again.

Thank you very much for the prompt reply. PE which is trading in this range. Nifty 7300 CE at 75 yesterday and sold it today at 82 but in my admin position it was showing Buy average price as 82. Zerodha members so that we could help each other out instead of disturbing the faculty. Thanks Nithin for the reply. When it comes to tech in trading I saw that innovation in zerodha and by far more attractive than the zero brokerage success formula. PUT value decreased So I decided to sell and sold at Rs 29. Positions like the above will have margin benefits as they are partially hedged. Please check before responding. You can post these questions on Varsity.

Option method is a tool which we have introduced on Zerodha Trader which suggests you and helps build option strategies. Once again thanks for finding time to reply. But could not find it any where. The calls and puts should be directly tradeable from the Options chain. The weekly option contracts do not have enough liquidity to afford very high leverage. If the price becomes zero at expiration then i will sell tomorrow only. At the market opening it is quite tough to call, it might sometimes be in your favor as well because of the higher volatility.

Please help me out with these basic things I hope I will learn it with time on this platform. NSE announced the launch of the weekly option well in advance yet you are not ready. Nifty closes below 8500 your puts get exercised automatically. PI platform to view the option chain and define Option method. Also, is there anyone in Zerodha customercare to whom I can talk regarding this? How can I sell the lot I bought back at 134? And I want to hold this till expiry. Is it possible with Zerodha kite or PI. But there are days when market could go up but calls premium could loose you money when the implied volatility drops, for example today, even though market is up call premiums are down.

This margin goes down for a method mentioned in the above pic because the various option postions are counteracting each other. What should I do If I want to buy and sell it some other day. SPAN calculator by simulating the trade. Start at the futures module. If there are no bidders, even if we put 0 or. And i know call is like long and put is like short position. The weekly contracts available in PI though.

Yes, you can but the option and sell the next second itself or anytime before the expiry date of that contract. If both are the same, the result will show the same. PM they call and ask me to update the Pi. Buy Calls, if the market goes up, premium will ideally go up and you can profit. Arm, the above would be beneficial to people who have an understanding on options. And one more thing lets say Nifty 7500CE is trading at 200 then what margin i require to have a long position? Sell first and then buy back, you have chances to make unlimited loss of money and hence exchange blocks margin similar to how they block in futures.

Option method Tool: A tool which suggests various option strategies based on what your views on the markets are including the payoff graphs for each of the suggested strategies. Hi, NSE has launched weekly Bank Nifty options. So that I can open 2 or more graphs. For Futures, you can sell and hold until expiry by paying the margin amount for holding that short position. Actually I was looking for Option method Payoff chart. Please help us on this.

In these cases whether we still had to pay the STT. However the calculator is showing a flat charge of Rs. So they can be exercised only on expiry day. Short selling and option writing are definitely very different from each other. You and your team never believes in that. Similarly, when it comes to trading, options are far. Advise you to go through Varsity. Futures was more popular among the two until the market meltdown in 2008 after which the popularity of options has increased tremendously, much more than futures today. My Initial Pay in Amount: Rs. Once option method is created on the day of expiry do we need to square off the method or will it automatically get exercised.

Phew, you are starting at the very basic. If you exercise an option, the settlement occurs in three business days, just as if you bought or sold stock on an exchange. This is not in the Indian context. If you buy 1 lot at Rs 50, your buy price will show 50 and buy average price will also show 50. For example I have 1 lakh rupees in my wallet. Again on that day premium came to 80 and I buy and exits. As always, you will want to check with your brokerage firm to ensure you understand their policies. Buy average price has no relation to settlement price, can you be more specific. Calls and puts with November expiry. Rs 4000 is credited to your account.

Option method tool, based on your view suggests you various option trading strategies and their payoff graphs. Dec 8th CE option, but in margin calculator the symbol is not available to calculate the margin required to short, only monthly contracts available. So shall i sell it or wait till expiration date. Please explain how to trade on your web platform. If you buy the second lot at Rs 100, your quantity will show 2 lots and your buy average price will now show 75, which is the average of 50 and 100. Future positions have unlimited risk, whereas in option buying the risk is limited to the premium you are paying.

NIFTY29SEP8800CE how one will know which year it is as nifty has 5 year option contracts at any point of time? So I opted for Zerodha open trade, and I figured out how the futures market works. Should I sell first and then buy the remaining legs. The window will look like below when you click on the restore button and the prices should start refreshing as the data is fetched from your market watch. Now, premium starts going up. Hi Nitin, Has the option method tool been removed in Z trader, I still have it on mine. So my order gets executed and I have 60k in my wallet. Similarly is there daily settlement in Options too let say i bought and hold Nifty 29 May 7200 CE at 100 and that day nifty 7200CE closed at 80 will i be debited 1000? Will I lose my entire premium or just a part of my premium? Let us suppose it needs 40k as margin.

Put option will choose not to exercise his option to sell. Now how much money I will have in my wallet after I exits. Then on expiry should I sell the contract or it will be sold automatically. Visit this blog to know how to add options onto market watch. Kite and PI and also have installed Nest. It can create confusion especially in BANKNIFTY which has weakly and monthly expiry while NIFTY has only monthly expiry. Just want to confirm, If I trade a hedge method where my maximum loss of money is predefined, and I want to be in method till month end.

Open a new sell order button and mention your price or sell it at market. In the payoff graph, and pay off, break even is missing, which is a key factor in determining which strike price to be taken for trade. MCX commodity options as well once they are launched. Hey Venky, the margin requirements are defined by our RMS team based on the liquidity and prevalent market conditions. How is the brokerage calculated for options? In case of zerodha has this features guide me how to use the same or is it in your pipe line for development or future release. In India, like I said, everything is cash settled. This has been on your list since Last year.

The starter pack is free of cost which includes option method, charting, and more. Your varsity module helped me clear NISM VIII Equity Derivative in first attempt. For the example, my view is that nifty will stay between 5800 to 6200 for Nov 2013 expiry. When you short options, the risk is unlimited and profit is limited to the premium you receive when you short the option. Okay, so exercising options in India has no meaning as all contracts are cash settled. Should I buy the options first and then sell for applying the method. This means that they can be exercised only on the maturity of the option.

Future is charged on the contract value whereas for options it is charged on the option premium. Instead if i can get the option chain with 1 click on underlying scrip than it will be not difficult to trade. You can place at once using basket order, but since they are different scrips they will be considered different orders. Is options method traded on intraday basis. Then the existing 5500 CE Long position will be offset? Kite should have the weekly options in the next two to three days. Actually i have been holding a nifty 7300 CE at premium of 56. EoD for 400 per lot. For example, if you exercised a call and simultaneously sold the equivalent shares of stock, those transactions offset each other.

So if market is bullish i shall buy call and if market is bearish i shall sell puts? Your days has turned into weeks and about to turn into months and then years. Bank Nifty weekly option still not available in Kite. For example, that day premium ends at 120 and I am not buying it to exit. Can you please help me about this message while i am trading for NFO optios buy or sell. In any case on the expiry day all options get exercised by default, so need to have this facility as long as the options are european.

In KITE, could not locate the BANKNIFTY weekly contracts. You mentioned we can take weekly option positions in Pi. Praveen, whatever value above 7300 Nifty closes on Thursday the expiry day, will be the value of your calls. On the trading platform, your profits for today will show based on the closing price of the options for yesterday and not based on your buying price and this is the reason you are seeing a loss of money and not profits on the platform today. The main issue is funds in my account as it is just enough to cover the exposure of a particular startegy. Average price shoot upto 82. Since the risk is unlimited, a margin is blocked in your trading account similar to futures. Nifty can have an impact of upto around 1 point on the Nifty.

Where will the market go is your call to make, but you can sell the calls whenever you want, there is no need to wait till expiry. Could you enlighten me? There are options with various strike prices. Interesting tool very helpful for people like me who trade on options. But, I did not sell it until now, I received your margin statement stating that I have only Rs. Option chain in PI. How soon can I sell the stock after I exercise a call option? If you see on the 4th Snapshot, there is an option to add to my method. YOu can also go to the admin positions link, and click on the square off option.

Options offer you an ability to setup trading strategies for multiple market scenarios. All options on India are now European. Also there is a error in bearish method, instead of market wont fall, it should be market wont rise. And found some errors in the method window test where moderately bearish says fairly certain market wont fall. Can we buy and sell at any point of time as in the case of monthly option? Also there should be columns for Option Greeks like Delta, Theta, Gamma which are updated in real time with the Option prices. If I place following order, what would be my brokerage for following order and can I place this combined order at one go at market price. Because Margin Calculator shows Rs. Taxes will be very low since taxes will applied on the premium. In equities, this can be done only on an intraday basis.

Can we expect from you that you be ready with your systems from day one of product launches. So to sell 6000 calls of nifty first and then buy back you would need almost 30k for an overnight trade. All options on NSE today are european now, which means you can exercise it only on the expiry day. So that there is high chance the stock or index would move either ways. Thus, an investor may take a long straddle position if he thinks the market is highly volatile, but does not know in which direction it is going to move. Nifty, it worked fine. If the price goes down, he uses the put option and ignores the call option.

Long straddle and long strangle is and was discussed in my thread. If the price does not change enough, he loses money, up to the total amount paid for the two options. Even I was one of the victim when I started trading 5 years ago. Entry point is important here, We need to enter only at the Support or Resistance level. He can enter into a long straddle, where he gets a profit no matter which way the price of XYZ stock moves, if the price changes enough either way. Yes, Time Decay matters when you hold it for a longer period.

For example, company XYZ is set to release its quarterly financial results in two weeks. So as soon as the resistance or support breaks, a huge move happens. This position is a limited risk, since the most a purchaser may lose is the cost of both options. The two options are bought at the same strike price and expire at the same time. At the same time, there is unlimited profit potential. The owner of a long straddle makes a profit if the underlying price moves a long way from the strike price, either above or below. If the price goes up enough, he uses the call option and ignores the put option. The risk is limited by the total premium paid for the options, as opposed to the short straddle where the risk is virtually unlimited.

With that, either Put or call option value increases. So the time value we are paying for the right we bought is Rs. Suppose, if at the end or before three month expiration, Srinivasan is able to find a buyer for that house for any price more than your agreed amount, say 60 Lacs, then he exercise his option to buy the house for Rs. In the above example, for Nifty November 7800 call option we paid a premium of 305 while the actual intrinsic value of the contract is Rs. So, for any options buyer the risk is limited to the initial premium amount paid and for an options sellers the premium received is the maximum profit he can get by taking a position in the contract. The longer the time remaining to the contract expiration, the higher the price of the premium. Nifty Futures contract at 8000. To reduce your risk! So, any fall in the market price of the stock will be offset with the similar rise in the value of the put option. Nifty futures at 7800 when the current market price of Nifty is 8000. For Example, If you are trading index options the contract size of BankNifty and Nifty is always 25 units while every stock has a specific contract size.

Then Srinivasan had the choice to either buy the house or let the agreement expires but the seller of the house had an obligation to sell the house, if Mr. On the other hand, if the price falls to say 6800, then you let your right to buy expires and you had your limited loss of money of Rs. Asian Paints which will give him a right to sell the stock at strike price at a cost of the premium paid. At present in India, there are 6 Index Options, 135 stock options and 6 long term Nifty Options available for trading. Similarly, the buyer of a Nifty October 8000 Put Option at Rs. The longer the amount of time available for market conditions, the greater the time value. So, any options buyer can lose the value of the premium even if market movement remains sideways during his course of trade. Today, many investors use the options market to manage the risk of their stock holding price fall. So, by buying a 7900 Call Option, the buyer is getting the right to buy Nifty Futures at 7900. Same applies with buying call options on index or stocks. It works within the favor of the option sellers as more and more time passes on the time value of the option contract diminishes very rapidly. So, he is under obligation to pay a margin just like in case of futures contract.

Premium is the total amount paid by the buyer of the options contract to get the right to buy or sell the underlying futures contract while it is the price received by the seller of the options contract. In other words, a call option is an agreement between you and the seller where he agrees to sell you a specific stock or asset at a fixed price on or before an expiration date. For Example, Nifty October 8000 Call option will have the expiration on 30th October 2014, while Nifty Nov 8000 call will have expiration on 27th November, 2014. This is because of the fact that the longer the time left, the greater the possibility of the price of the underlying can change and move favor. Most of the option traders square their positions to book their profits or limit their losses prior to the expiration. Nifty Futures contract at 8000 for Rs. For Example, Nifty Futures is currently trading at the level of approx. For example, if you are expecting Nifty Index to fall from its current level of 7000, then you buy a Nifty 7000 put option for Rs. For example, if you are expecting Nifty Index to rise from its current price of Rs. Exercise price, also known as Strike Price, is the price at which the underlying will be delivered should the holder chooses to exercise his right to buy or sell.

But on the other hand, if Srinivasan is unable to find a buyer for that house for more than 50 Lacs, then he lose 1 Lacs premium and he do not need to buy that house and let his right to buy expires. Nifty futures contract at 8000 for Rs. Nifty 7000 call option for Rs. Each offers an opportunity to take advantage of futures price moves without actually having a futures position. On the other hand, if the price rises to say 7200, then you let your right to buy expires and you had your limited loss of money of Rs. The situation is different if you sell or write an option. All contracts except Long term Nifty option contracts expires last Thursday of every month. Options sellers trading strategies rest around cashing in this time value. Suppose if, before the expiration of the Contract, the price advanced to Rs. Futures contract is an obligation for both the buyer and seller of the futures contract where the seller is obligated to deliver the asset and buyer is obligated to take the delivery of the asset under agreement while options agreement gives a choice to the buyer of the options contract and an obligation for the seller of the contract.

For Example, if Nifty future is currently trading at the price level of 8000 and Nifty November 7800 call is trading at a premium of Rs. So, it is very important for any new trader entering the options market to get familiar with all the different aspects of the options market and with wide concepts and terms more commonly used in options trading world. Why to Trade Options? We are happy to know that you like our work. Nifty futures contract at 8000. Suppose if, before the expiration of the Contract, the price decline to 6800 then the price of that 7000 put option will rise to 200 and you can make a profit of Rs. Each options contract has a standardized size that does not change.