Hence kindly clarify how to deel with such situation in e-trading like "Indian Nifty". To get NR4 get last 3 days range 4 If today's range is smallest of all 7 days, then today is NR7 day.. I wrote a python script to scrap from this URL. For American options you can use the Binomial Model - there is a spreadsheet on the Binomial page. If you are happy with any profit you've made already then you should exit while you can.
Option Trading Strategies in Indian Stock Market 78 Annals of Management Research, Volume 1, Number 1, September – October the jobbers, sub-brokers and .
However, the ATM strike should really be driven by the "forward price" of the stock. As option contracts carry the right to exercise at a point in the future, their value is first based on the future price of the stock, which is the stock price plus the cost to hold the stock cost of carry or interest rates less any dividends received during that period.
As you apply the interest rates and dividends to the current stock price you will calculate a price different to the stock and this is the true ATM price. For retail traders who are simply eye balling the option screen to see where the ATM is, just using the stock price is good enough, which is why they've noticed that the call premiums are higher than the puts as the true forward price is actually higher than the stock price.
Call, put and stock prices for the same strike are all related and cannot violate put call parity. Take a look at that link to read more and let me know if I've missed anything or if you have any questions. I just finished reading a book on options and one of the discussion points was that an ATM call will always have a higher premium than a put at the same strike. If I find a put which has a higher premium then a call at the same strike price, is this unusual?
Is there a way to take advantage of such a situation? Is it fair to assume that this is a temporary situation? Hi Ash, If the option is out-of-the-money then, yes, it will begin to lose value very quickly as expiration approaches. If you are happy with any profit you've made already then you should exit while you can. Hi Peter, I have a question on when to close out my position on a call option. I currently have a April call option and i wanted to know if there are any best practices around when to closeout your position if you are not planning on purchasing the stock at expiry?.
I am asking this because as time goes by the price of options go down. It is end of feb now and my options expire in Apr. Your input is appreciated. Hi Rakesh, If you want limited risk and unlimited profit potential then you are best looking at positions like long call , long put , long straddle , long strangle etc - these are strategies where you are net long options. Hi, Can anybody tell me the statergies that I need to keep in mind before trading in "Options"?
So that the risk percentage is nominal and the probality of profit is high. Hi eh, This strategy is called a short guts and is similar to a short strangle except you are shorting a put with a higher strike price, where a strangle sells the put with a lower strike price. The payoff calculation is a little different also: Can I ask why would choose this approach instead of selling the call and the put?
Hi Varun, Do you mean selling a call and a put together at the same strike price i. If so, and the combined premium for this trade was 10, with the underlying now at , then; Net premium received: Take away the premium already received and you're left with -1, Hi, I am new to this and this site has been a big help , I wanted to clarify one thing. Please do clarify whether this is possible or not. Peter If I buy a call e. Thanks and when I click e. You can take a look at the option prices on Yahoo.
Peter I'm a new guy here Peter, What if I sell K put on the day of expiration of the contract and the stock does not move significantly in value to exercise the contract for who ever bought it. Do I get to keep the commission? You won't be able to roll over at the same price - if you want to keep a position in the same strike price, you will have to sell buy out of the front month contract and buy sell into the back month at the current market prices.
Further, if I need to rollover my position to next month, then do I need to pay some extra premium or can I rollover at the same price? You would close your position for a profit without having to wait until expiration to exercise the option. Hi Peter, Really good information on Options. I had one question - Suppose I buy a an option Call for Rs 30 whereas the index is at Within 2 hours, index moves to and option premium is Rs Can I sell the contract now and earn Rs 5 per lot as profit though the index did not reach ?
Both futures and stocks have a delta of 1 so hedging with a future is much the same as hedging with a stock. Please see the in-the-money page. Hi Azaragoza, you can check out my option pricing spreadsheet for the formula. My qestion is let say i own akam and buy option for either put or call. I want to sell it right after i purchase the contract let say within one hour. Hi Jai, it really depends on what market you're looking at and what your view is of this market i.
That's what's great about options - the strategies vary according to lots of factors. You'd need to check with your if they can provide this service. Hi, If one is using computational systems as an aid to decision making, then is there a source to receive streaming real time prices over the internet in a way which could be easily integrated into a system? Hi Anon, Premium is the price of the option as it is traded in the market. Commissions aka brokerage are what you pay to your broker for executing your trade.
Depends on where the stock is in relation to the strike price. You will only lose the premium paid plus commissions i. Let me know if anything is unclear. I am using Thinkorswim. I haven't seen about premium. So, I am wondering that what the differences between "premium" and "commission" are?
My question are; 1. If the strike price expired Oct 31, is , how much would I loss 30 or 2. Before the end of expiration, I thought that the market would go down. Which one should I pick between "sell it before expiration" or "do nothing in order to let it expired.
If the strike price expired Oct 31, is , what will happen if I do nothing and let it expired? Depends on the country and what your main form of income is I'd say, whether the trade is treated as capital gains or income. What is the tax liablity of a option trading when option is exercised.
This explaination talks about option in case of expiry but what in case of trade which takes place in between the expiry date. Hi Meghna, just because there are no bids out there doesn't mean there aren't any buyers. You can just enter a sell order into the market and if the price is right a market maker will take it.
Hi Peter, I know that i can reverse the position by selling in the same market. Hence kindly clarify how to deel with such situation in e-trading like "Indian Nifty". Yep, you can just reverse the option position by selling the same option contract in the option market.
HI, Say if I am buying an in the money European option with an expiry of 4 months and If the option is deep ITM or OTM during at the end of 2nd month and if i want to crystallize my profits than is there any way out for it?
It's hard to beat Interactive Brokers on brokerage and platform functionality. Although I've heard that Think or Swim have a great platform also. I use and can recommend Interactive Brokers. They are a US based company and you don't have to live in the US to open an account with them. Can you suggest me broker's web site to open account and trade. Hi Sam, thanks for the feedback! Yes, I think that simple naked long positions are still useful and obviously have the most bang for buck so to speak.
It's just that option traders need to understand the factors that affect an option's value - specifically volatility. Often you may purchase a call option and even though the stock does rally the call option won't gain any value - or could even lose value in the market.
This is because the drop in implied volatility has played a larger role in the option's value than the move in the stock price. This can be discouraging to new option traders.
But this doesn't mean that naked call and put buying should be avoided Anyway, talking about options strategy , based on your experience, is it still useful using only simple long call or put? Hi Rajesh, are you located in the US? If so, the following companies provide option courses and training; Options University Online Trading Academy. Hi Raju, thanks for the feedback Hi Dale, HPQ is currently at With expiration tomorrow your put has a delta of -1, which means you're effectively long the stock now.
If that's the case you could sell out of the puts tomorrow and cut your losses on this trade. You will limit your gains if the stock gets there but will have the immediate gain of income from the premium received. I am short the hpq jan 12 45 put, what is a good stategy to limit my risk on the down side?
Should I go long the same put at the same strike? You could try Options University. I think that the best overbought oversold indicator and a reversal signal is when lets say a stock is in an up trend than for a couple of days in bound-range.
No, OTC can mean a transaction between two parties for any type of financial instrument - even stocks can be traded OTC. Hi Yogesh, any strategy that has unlimited updside profit potential e. Long Straddle, which allows for unlimited profit if the stock trades up or down. Hi, i am Indian Investor and trader. I have just this website few days back and i want to tell you this is best site on Options Trading and imparting knowledge on the subject.
Hi Lisa, Yes, you sure can trade online. You could also try http: I want to know what r the Riskless Strategies in Option Trading. That will give money in any market condition. Hi Prafulla, Sorry, I don't understand your question. Could you be more specific please? Creating Option Combinations Buying and selling calls and puts together gives you the ability to create powerful trading positions.
Bullish When you market prices to increase but want to limit your total exposure. Bearish When you want market prices to decrease but still want some gains on the upside. Neutral When you want the market to either stay stable or explode in either direction. But how can you tell if an options implied volatility is historically high? Comments Peter December 6th, at 7: Luciano December 6th, at 7: Luciano Peter December 1st, at 5: Luciano December 1st, at 8: Peter November 18th, at 3: Renee November 17th, at 8: Igwe Zachary Githaiga March 30th, at 3: Peter December 3rd, at 2: Terry B November 25th, at 5: Peter August 26th, at 6: You dismissed this ad.
The feedback you provide will help us show you more relevant content in the future. The Idea is to find out companies that will have a trend day or a large candle either Black down or White up We are Hunting for a Trend Day, which is a very recurring pattern in the Stock Market. If you want to become less dependent on stock-based investments, consider the following strategies. Learn More at yieldstreet.
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There are many strategies available publicly to trade on any kind of markets. The profit really comes from the strategy that you are most comfortable to trade with. Trading using NR7 Method: Market goes through regular contraction i. Expanding range is followed by Contraction and vice-versa.
So if we can indetify the narrow range days, then it give us a step ahead of everybody to benefit from coming expansion. NR7 is term given to a day that has the daily range smallest of last 7 days including that day.
How to Find NR7 day.. To get NR4 get last 3 days range 4 If today's range is smallest of all 7 days, then today is NR7 day..
It is that simple. This is one of my favorite setup. In many cases, NR7 break-out is found near the start of a new wave. For day trader, this setup indicates that they can anticipate wide range days, so they should be prepared to chase the trend and use trailing stops so that they can get maximum from the coming trend. Thank you for your feedback!
The one thing you should do when in New York City. New York's spy museum is open. Go on missions to test your hacking, deception, and espionage skills. Learn More at spyscape. I wrote a python script to scrap from this URL [math]https: What makes it even more difficult in India is that there is no practical introduction to trading and investing in schools or colleges making it tougher for people to comprehend the concepts.
People end up following tipsters paying thousands of rupees a month. They identify day trading strategies that are tried, tested,reviewed. They stick to a strict money management system.
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Option Trading Strategies In Indian Stock zooguillem.ga OPTION TRADING STRATEGIES IN INDIAN STOCK MARKET Thu, 30 Aug GMT Option Trading Strategies in Indian Stock Market 78 Annals of Management Research, Volume 1, Number 1, September –. DOWNLOAD OPTION TRADING STRATEGIES IN INDIAN STOCK MARKET option trading strategies in pdf Hedged, positional trading strategies in futures and options by IIM alumnus. During last one decade there was a rapid growth of derivatives market in India in terms of trading volume, number of stock options available for trading, participation of investors in derivatives market. It was also DEVELOPING OPTION STRATEGIES BY USING TECHNICAL ANALYSIS: A CASE STUDY OF AUTOMOBILE SECTOR.