Get started

Optionstrading

CHOOSING OPTIONS STRIKEChoosing wrong strike prices can lead to big losses even when our analysis is right. It's due to Theta decay. So Lets understand some basics of options strike price. There are three types of strike prices based on their moneyness. 1)ATM (At the Money) 2)OTM (Out of the Money) 3)ITM (In the Money) FOR CALL OPTIONS : Lets assume Stock ABC is trading at 150 (spot price). Then, Spot price = 150 ATM Strike = 150 Any strike above spot price is OTM for call option. Ex : 160 ,170,180 etc., Any strike below spot price is ITM for call option. Ex : 140, 130, 120 etc., FOR PUT OPTIONS : Stock ABC is trading at 150 (spot price). Spot price = 150 ATM Strike = 150 Any strike above spot price is ITM for put option. Ex : 160 ,170,180 etc., Any strike below spot price is OTM for put option. Ex : 140, 130, 120 etc., HOW TO CHOOSE THE STRIKE AMONG THE ABOVE THREE MONEYNESS 1)Follow a simple rule, Buy a strike price which is closer to the spot price. "OTM STRIKES ARE BIG NO" . 2) Remember! when we are buying an option, the stock / index needs to move up / down with a good momentum. So that our option will gain some value & we will be in profit. So it doesn't make sense to buy a OTM call / put. Because if a strike price is far away from spot price, it won't give us much movement due to time decay. I have even shared my option strike rules as follow. Friday, Monday & Tuesday = ATM strikes Wednesday & Thursday = ITM strikes This is how I used to pick strikes for intraday. The reason is simple because, if we are closer to the expiry (Thursday) the effect of theta decay is very high. Due to which our premiums will not move much even if the stock / index has moved pretty well. By following these rules, our chances of losing money will drop drastically. Happy Learning & Earning :) - DivyaaPugal
NSE:RELIANCEEducation
by Divyaapugal
25
EASY OPTION TRADING STRATEGY FOR NIFTY INDEX TRADING Key Levels For Day Trading Support Zones For Nifty Intraday Trading on Fiday First Resistance Zone For Nifty – 17284 – 17293 Second Resistance Zone For Nifty – 17220 – 17230 Third Resistance Zone For Nifty – 17165 – 17181 Forth Support Zone For Nifty – 17060 – 17072 Resistance Zones For Nifty Intraday Trading on Fiday First Resistance Zone For Nifty – 17380 – 17370 Second Resistance Zone For Nifty – 17472 – 17458 Third Resistance Zone For Nifty – 17540 – 17528 –
NSE:NIFTYShort
by manojshinde27
BankNifty Daily Levels Update For Option Day Trading Major Support Zones For BankNifty On Expiry  First Support Zone For Nifty –             37523  - 37560 Second Support Zone For Nifty –        37306  - 37345 Third Support Zone For Nifty –          37055  - 37095 Major Resistance  Zones For BankNifty On Tuesday  First Resistance  Zone For Nifty –      ( 37852 - 37827  ) Second Resistance  Zone For Nifty –   ( 38195 - 38165 ) Third Resistance  Zone For Nifty –      ( 38535 - 38495 )
NSE:BANKNIFTY
by manojshinde27
NIFTY TRENDNifty analysis : Two confirmations of shorts 1. TrendLine Rejections with above avg Volumes 2. Rsi Divergence upon follow up - Trade ideas 1. Low Risk - Low Rewards _ High Probabilty (CREDIT SPREADS) TRADE IDEA : SELL 18200 & above calls SEP expiry & BUY HEDGE 2. Low Risk - High Rewards _ (RATIO) TRADE IDEA : SEP - Monthly Expiry BUY ATM 17600PE - 2lots BUY 16400PE - 2lots SELL 16800PE - 4lots POP : 42% \\ Margin Req : 80K \\ Breakeven : 17400 \\ Max Profit @16800 \\ Max Loss above 17600
NSE:NIFTY1!Short
by Devyansh_B
Types of participants in the derivatives marketHey everyone! Last week we talked about the basics of derivatives and what all different derivative instruments are available in the markets. In this post, we will talk about the types of people who use derivatives and why they exist. There are broadly three types of participants in the derivatives market: → Hedgers → Traders (also called speculators) → Arbitrageurs. An individual may play different roles at different times. Hedgers → They employ derivatives to mitigate the risk they suffer from fluctuations in the pricing of the underlying assets. → Institutions such as investment banks, central banks, hedge funds, etc. all use derivatives to hedge or reduce their exposures to market variables such as currency exchange rates, interest rates, equity values, bond prices, and commodity prices. Speculators/Traders → The speculators are primary participants in the futures market. → They try to predict the future movements in prices of underlying assets and position themselves accordingly. → Speculators can be individual traders, proprietary trading firms, hedge funds, or market makers. Arbitrageurs → Arbitrage is a deal that produces profit by exploiting a price difference in a product in two different markets. → Arbitrage occurs when a trader executes a simultaneous purchase and sale of the same asset in different markets in order to gain from tiny price differences between them. → The arbitrage trade is often short lives because the arbitrageurs would rush in executing these transactions, thereby closing the price gap at different locations. Thanks for reading! Hope this was helpful. See you all next week. 🙂 – Team TradingView Feel free to check us out on Twitter , Instagram , and YouTube for more awesome content! 💘
NSE:ADANIPOWEREducation
by TradingView
1
Basics of DerivativesEver wonder what derivatives are? Check out this handy guide! 😉 A derivative is a contract or a product whose value is derived from the value of some other asset known as underlying. A variety of underlying assets serve as the foundation for derivatives. These include: → Financial assets such as Shares, Bonds, and Foreign Exchange. → Metals such as Copper, Zinc, Gold, Silver, etc. → Energy resources such as Crude oil, Natural Gas, etc. → Agricultural products such as Wheat, Cotton, Sugar, Coffee, etc. Cotton Futures Gold Futures Derivative Instruments Forwards It is a contractual agreement between two parties to buy/sell an underlying asset at a certain future date for a particular price that is pre-decided on the date of the contract. Both the contracting parties are committed and are obliged to honor the transaction irrespective of the price of the underlying asset at the time of delivery. The terms and conditions of the contract are customized to cater to the needs of both parties. These are Over-the-counter (OTC) contracts, meaning they are a deal you make directly with a bank or a dealer. As a result, there is always counterparty risk involved. Futures Futures are standardized contracts similar to a forward contract, except that the deal is made through an organized and regulated exchange rather than being negotiated directly between two parties. The arrangements come with a fixed maturity date along with uniform terms for all the parties involved. In simple language, futures are exchange traded forward contracts. The futures contract has little to no counterparty risk since the exchange is acting as a mediatory. Options An Option is a contract that gives the right, but not an obligation, to buy or sell the underlying on or before a fixed date and at a stated price. While the buyer of the option pays the premium and buys the right, the writer/seller of the option receives the premium with the obligation to sell/ buy the underlying asset if the buyer exercises his right. There are two types of options: → American → European American options can be exercised at any time prior to their expiration while the European options can only be exercised on the expiration date. In India, European options are used. Swaps A swap is an agreement made between two parties to exchange cash flows in the future according to a prearranged formula. A random variable (such as an interest rate, foreign exchange rate, commodity price, etc.) is used to determine at least one of these series of cash flows at the moment the contract is initiated. Swaps are, broadly speaking, a series of forward contracts. They help the participants manage risk associated with volatile interest rates, currency exchange rates, and commodity prices. Thanks for reading! Next week we’ll talk about the types of people who use derivatives and why they exist. Stay tuned! See you all next week. 🙂 – Team TradingView Feel free to check us out on Instagram , YouTube , and Telegram for more awesome content! 💘
NASDAQ:TSLAEducation
by TradingView
2