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  What is Nifty Future ? How to trade in Nifty Future ?
What is Nifty Options ? What is call and put ? How to trade in Nifty Options ?
  What is Stock Future ? How to trade in Stock Future ?
  What is Stock Options ? How to trade in Stock call and put options ?
  What is Cash intraday or Equity intraday ? How to do Equity intraday trading ?
What is Nifty Options ? What is call and put ? How to trade in Nifty Options ?

The main five segment of our Indian Stock Market are Equity , Nifty Future, Nifty Options, Stock Future, Stock Options. A Newcomer always want to know about these segment. Number of questions aries in his mind like what is Nifty Future ? What is options ? How to buy call and put ? What is call options ? What is Put options ? what is option writing ? etc. etc.

We are going to share here some information about Nifty options with you in very simple language.

There are two type of options in Nifty known as CALL and PUT. These are basically, contracts which expired on last thursday of the month of on expiry day.

Let us first explain CALL. In general word we can say CALL means up and PUT means down. Suppose currently Nifty Spot trading on 5600, Nifty Future Nov Contract trading on 5615. Then there are call options available for Nifty Future like there will be 4000 call option, 4100 call option, ........, 5500 call option, 5600 call, 5700 call ....... 6200 call or more may be available. Call option prices move up or down as Nifty Future move up or down. Let us take one example for call option, If Nifty Future at 5615 and Nifty 5700 call available at Rs. 50 so when Nifty Future will move towards 5700, Nifty 5700 call price will go up, same when Nifty Future will go towards 5600, Nifty 5700 call price will come down. Lot of other factor also impact on options prices, like if it is the starting of fresh expiry then call option will be less volatile and as the expiry date will come closure option becomes very volatile.

Now what is Put option ? . As we said PUT means down. Suppose currently Nifty Spot trading on 5600, Nifty Future Nov Contract trading on 5615. Then there are PUT options available for Nifty Future like there will be 4500 put option, 5000 put option, ........, 5500 put option, 5600 put , 5700 put ....... 6200 put or more may be available. Put option prices move up or down as Nifty Future move up or down. Let us take one example for PUT option, If Nifty Future at 5615 and Nifty 5500 Put available at Rs. 40 so when Nifty Future will move towards 5570 or lower then Nifty 5500 put price will go up, same when Nifty Future will go towards 5700, Nifty 5500 put price will come down. Lot of other factor also impact on options prices, like if it is the starting of fresh expiry then call option will be less volatile and as the expiry date will come closure option becomes very volatile.

What is option writing ? To sell any call option or put option without having position in our account is know as option writing. Suppose Nifty Future is around 5600 and we think that till expiry it will not cross 5800. And Nifty 5800 call available at suppose 3 rs. Then we can sell it . We can sell one lot or more lot as per our capacity. If we are selling this option then we will get Rs. 150 [ lot size 50 x call price Rs. 3 ] same time and on expiry day or before expiry we will have to cover it. If we are not covering it , means we are not buying it then there is the provision of some penalty. So it is our advice to cover your position before settlement. If in any case, Nifty moved to 5900 after your option writing then the value of Nifty 5800 call will be 100 rs and as you sold it at 3 rs , so your current loss will be Rs. 4850.00 cause you will have to buy that option at 100 rs. So in simple lagunage your buying price 100 rs and sell price 3 rs.

How to calculate profit in Nifty options trading ?

Let us take more example :-

Suppose you bought today one lot Nifty 5700 call at Rs. 30 and sold out next day at 50, it means you gained 20 points and your profit will be

20 ( Gained points ) x 50 ( lot size ) = Rs. 1000.00 ( Profit )

Suppose you bought today Nifty 5700 put at 70 rs and sold out same day at 80 , it means you gained 120 points and your profit will be

10 ( points ) x 50 ( lot size ) = Rs. 500.00 ( Profit )

Suppose you bought 10 lot Nifty 5800 call at 30 rs and sold same day at 40 rs, it means your total profit will b e

10 ( Gained points ) x 50 ( lot size ) x 10 = Rs. 5000.00 ( Profit )

We have not added the brokerage in these calculation.

Now I hope that Nifty options trading concept is clear to you. If you want to share your view with us or having any kind of query and want to ask any question then you can post it here, as soon as possible, you will get the reply.You can directly write to us to email id "smileadvisory@yahoo.com"

 
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