And remember, not every trades end up in profits. Sometimes, you need to face losses as well but those are limited. In the below trade, after initial buy trigger, it hit stop loss and short trade was triggered which ended up in minimal loss by end of the day when position was squared off. I have tested this scenario with last 9 years of historical data From — The system has given more than 17, points in last 9 years.
Max loss in a trade has not exceeded more than points. Risk reward ratio is also good. However, if we face the same points loss now when Bank Nifty is trading around , it is just 0. The monthly profit seems to be consistent, where when we have bigger volatility days, profits are really huge. And look at the yearly profits, seems to be a great result. However, year seems to be bad, a flat year when index made more huge movement in and when mutual fund made high returns in , this strategy under performed. Its mainly because of drastic reduction in volatility last year, remember volatility is the friend of day traders, we need huge movements to make high returns.
But still in less than 6 months in , the returns are spectacular. In the case of real estate, the strike price was 30 lakh. You can buy any underlying instrument such as stock, commodities , index, 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. 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 shares. To trade options you need to have a trading account with any of the top stockbrokers like Zerodha , or 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.
Gold price today Rs 51,100 per 10 gm, silver trending at Rs 58,300 a kg
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. 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. For 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. There are at least call options available on a particular stock.
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For example, the Asian Paints stock shows the following call options contract with different strike prices. 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 NSE 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, then 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.
Swing Trading Rules | 3% Nifty Option Strategies Trade Limited Profit & Loss -
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.
How to profit from Nifty moves with futures and options
When there are more puts than calls, i. We are providing all the services stock market and commodity market. Your email address will not be published. Notify me of followup comments via e-mail. Share 8. Here is an example for you, when markets are in downtrend you should always wait for pullback As this may be the last budget before the next general election. So it is more likely that Nifty Options trading strategy for Budget Session Interim budget will be announced in parliament on Saturday, 28 Feb This will have a huge impact on the stock markets, currencies markets. It will be most closely watched by industrialist, corporate houses Nifty Options Strategy for Trading Bullish Market, Entering the Market Nifty Option trading strategy when markets are bullish, in this strategy I will be teaching how to check if markets are still bullish then we will see how to trade Nifty option call option in About Bhaveek Patel Bhaveek Patel is one of the most successful traders, technical analyst, and investor, his areas of interest include stock market, forex, and gold trading.