BASICS OF CALL OPTIONS AND HOW IT WORKS !!!

How exactly do options work? We have all heard of call and put options and options trading. But how to trade options and what are the key features of options trading in India. Let us first understand what call options is and then let us get deeper into call options with an example.

What is a call option?

Options are financial contracts drawn on an underlying asset, which can be stocks, commodities, or currencies.

A call option is a right to buy without an obligation to buy, which means you execute an option contract when it is profitable.

A call option is a right to buy without an obligation to buy. So if you have a call option on TCS then you have the right to buy TCS but no obligation to buy TCS at a pre-determined price. For example, if you have bought a TCS 1-month 3540 call option at a price of Rs.20. On the settlement day if the price of TCS is Rs.3700, the option is profitable to you. But if on that date the price of TCS is Rs.3200 then you are not interested in buying TCS at 3540  when you can buy it in the open market at Rs.3200. For this right without obligation you pay a premium of Rs.20, which will be your sunk cost.

A call option will have a strike price, which is the specific price quoted for the underlier in the contract and expiration date. Like in the above example, the strike price of TCS shares is 3540, and the expiry date is 1-month. To purchase a  call option, you need to pay an amount to the seller/writer, called a premium. If you choose not to exercise the call option, the seller gets to retain the premium, which in that case will be his profit. If the call option holder decides to exercise the right in the contract, the seller is obligated to sell the underlier at the strike price.

The opposite of a call option is the put options. Put options give the options holder rights to sell an underlier at a strike price at a forward date. Both call options and put options trade in the Indian market. Now let's understand options trading in India.

Key Takeaways

- Call options are financial contracts that give the holder rights to buy an underlier at a strike price on a future date

- Executing a call option is profitable when the strike price is lower than the market price at the time of expiry 

- A call option becomes premium when the price of the underlier moves upward in the market 

- The market price of the call option is called a premium. It is determined based on two factors: the difference between the spot  and strike price of the underlier and the length of time until the option expires

- Call options are bought for speculations and sold for income purposes  

BANKBARODA OPTION STRATEGY BOOK PROFIT

STRATEGY GIVEN IN 20 OCT 2021 TO CHECK VISIT http://optioncallputtradingtips.blogspot.com/2021/10/bankbaroda-option-strategy-for-october.html

BANKBARODA 100 CALL BOOK PROFIT NEAR 2.8-3 BUY GIVEN @ 1.6 PROFIT OF 14040

BANKBARODA 80 PUT EXIT NEAR 0.40 BUY GIVEN @ 0.70 LOSS OF 3510

NET PROFIT 10530

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How To Profit From Nifty Moves With Futures And Options !!!

Traders with a view on markets and a risk appetite can take exposure to the Nifty by paying just a fraction of the index’s value through Nifty options and futures.

1. What are Nifty futures and options?
Nifty futures are a contract that gives its buyer or seller the right to buy or sell the Nifty 50 index at a preset price for delivery at a future date. Nifty options are of two types —call and put options. A call option on Nifty gives a buyer the right, but not the obligation, to buy the index at a predetermined price during a specified time period. Similarly, a Nifty put gives its buyer the right to sell the index. A seller of the options is obliged to give or take delivery of Nifty from the buyers. In practice index futures are cash settled, like their European counterparts.

2. How does a Nifty futures and options contract work?
Suppose trader A feels Nifty will rise from 18700, He can buy one lot (75 shares) of Nifty futures by putting a margin at a fraction of the contract cost. His counterparty trader B sells her Nifty at that level. If Nifty rises to, say, 18800 A has the right to buy the index at 18700 from the counterparty and sell it to him at 18800, gaining Rs 5000 (100×50). If the Nifty futures fall to 18600, B sells the futures to A for 18700 even though Nifty trades at 18600, which means the buyer faces a Rs 100 a share loss.

How Weekly Banknifty Options Strategy Works !!!!

Banknifty options on a weekly basis were first introduced a few years back and have become quite popular among traders. The idea was to encourage more traders in the Nifty to give greater depth and to ensure that risk is reduced with lower time to maturity. In the last couple of years, the Nifty weekly bank options have been attracting interest from traders and from retail investors as a low-cost method of trading the Banknifty options. Let us look at some Banknifty trading techniques and how to trade in banknifty weekly options. Let us also look at the best banknifty trading strategy in the current market.

How traders can profit from the use of Weekly Banknifty options?

Unlike the normal Banknifty options that mature on the last Thursday of every month, the Banknifty options have a weekly maturity. Of course, they have a similar lot size for trading consisting of 40 units per lot and the weekly options will mature on the last Thursday of every week. At any point of time, there will 7 weekly options that will be open for trading. Here is how traders can benefit from the use of Weekly Banknifty options.

Weekly banknifty options can be used as a better hedge against short term even risk. Let us understand this point. For example, if there is a Fed meet on Tuesday where the Fed is expected to announce a tapering of its bond buying policy. In that case, the weekly options expiring in that week will react a lot more compared to the monthly option as the context is more immediate. Thus, these weekly banknifty options give the opportunity to hedge risk in a more immediate perspective.

From an exchange perspective and from the trader’s perspective, the weekly options are likely to increase the volumes of trading in the Bank Nifty. For a very long time, the trading and volumes were concentrated largely on the Nifty alone. This weekly option will give an opportunity to expand the gamut to Banknifty options too. That will be an additional hedging tool.

Historically, banknifty has seen twice the volatility of the Nifty and hence hedging becomes a little more complicated. Since the Banknifty is closely related to the ups and downs of the financial system in India and the world, any news tends to get transmitted rapidly. A weekly option on the Banknifty will be able to capture these kinds of volatility much better as the short-term movements will be captured more effectively.

BANKBARODA OPTION STRATEGY FOR OCTOBER 2021

OPTION STRATEGY BUY BANKBARODA 100 CALL @ 1.6 AND 80 PUT @ 0.7 

 FOR MORE DETAILS WHATSAPP ON 9039542248

Strike Price	Call Option Price	Strike Price	Put Option Price	Strike rate	Closing price	Payoff
100	1.6	80	0.7	10	50	324090
100	1.6	80	0.7	10	60	207090
100	1.6	80	0.7	10	70	90090
100	1.6	80	0.7	10	80	-26910
100	1.6	80	0.7	10	90	-26910
100	1.6	80	0.7	10	100	-26910
100	1.6	80	0.7	10	110	90090
100	1.6	80	0.7	10	120	207090
100	1.6	80	0.7	10	130	324090

 

INDIACEM DOWN BY 7% OPTION STRATEGY ROCKSSS

STRATEGY GIVEN IN TODAY'S POST TO CHECK VISIT http://optioncallputtradingtips.blogspot.com/2021/10/indiacem-option-strategy-for-october.html

INDIACEM 200 PUT BOOK PROFIT NEAR 6.5 BUY GIVEN @ 3.2 PROFIT OF 9570

INDIACEM 240 CALL BOOK NEAR 3 BUY GIVEN @ 3.3 LOSS OF 870

NET PROFIT 8700

INVESTMENT 18850

RISK :: RETURN

18850 :: 27550

 FOR MORE DETAILS WHATSAPP ON 9039542248

INDIACEM OPTION STRATEGY BOOK PROFIT

OPTION STRATEGY BOOK PROFIT IN INDIACEM 200 PUT NEAR 6.5

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INDIACEM OPTION STRATEGY FOR OCTOBER 2021

INDIACEM BUY 1 LOT 240 CALL @ 3.3 AND INDIACEM 200 PUT @ 3.2 

 FOR MORE DETAILS WHATSAPP ON 9039542248

Strike Price	Call Option Price	Strike Price	Put Option Price	Strike rate	Closing price	Payoff
240	3.3	200	3.2	10	150	126150
240	3.3	200	3.2	10	160	97150
240	3.3	200	3.2	10	170	68150
240	3.3	200	3.2	10	180	39150
240	3.3	200	3.2	10	190	10150
240	3.3	200	3.2	10	200	-18850
240	3.3	200	3.2	10	210	-18850
240	3.3	200	3.2	10	220	-18850
240	3.3	200	3.2	10	230	-18850
240	3.3	200	3.2	10	240	-18850
240	3.3	200	3.2	10	250	10150
240	3.3	200	3.2	10	260	39150
240	3.3	200	3.2	10	270	68150
240	3.3	200	3.2	10	280	97150
240	3.3	200	3.2	10	290	126150