Nifty Call Put.

What is NIFTY?

The Nifty 50, which is also known as CNX Nifty or simply the Nifty, is the National Stock Exchange of India.

It is the benchmark stock market index for the Indian equity market.

However, the CNX stands for ‘CRISIL NSE Index’.

Nifty Call Put.

The ownership and management of Nifty are under India Index Services and Products (IISL).

IISL is a completely owned subsidiary of the NSE Strategic Investment Corporation Limited.

However, the IISL was having a marketing and licensing agreement with Standard and Poor’s for co-branding equity indices until 2013. Nifty Call Put.

Nifty Call Put

Am sure you must be thinking the nifty call put is having something different from the stock option.

But it’s not like that. Nifty call put behaves just like any stock option. Nifty Call Put.

What is an Option?

An option is a derivative that represents a contract sold by one party to another party.

The contract offers the buyer the right to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a certain period of price during a certain period of time or on a specific date.

However, this is not an obligation.  The call option gives the option to buy at the certain price, so the buyer would want the stock to go up. Nifty Call Put.

While the put option gives the option to sell at a certain price, so the buyer would want the stock to go down. Nifty Call Put.

In the case of an Index option, its value is based on the underlying index value.

Just like the stock option, the Nifty call put also has a lot size and other factors like call and put options, different strikes to trade and of course time limit to expire.

Nifty Call Put

Here are some key features of the call option:

Specifics:

To buy a ‘call’ option, you have to place a buy order with your broker specifying the strike price and the expiry date. Nifty Call Put.

You will also have to specify how much you are ready to pay for the call option.

Fixed Price:

The strike price for a call option is the fixed amount at which you agree to buy the underlying assets in the future. Nifty Call Put.

It is also known as the exercise price.

Option Premium:

When you buy the call option, you must pay the option writer a premium. Nifty Call Put.

This is first paid to the exchange, which then passes it on to the option seller.

Margins:

You sell call options by paying an initial margin, and not the entire sum. Nifty Call Put.

However, once you have paid the margin, you also have to maintain a minimum amount in your trading account or with your broker.

What is the Current Lot Size of Nifty Call Put?

Right now the lot size is 25.

But till October 30, 2014, the lot size was 50.

Nifty Call Put

This was the expiry day of the October 2014 series. Nifty Call Put.

From the very next trading day, that is October 31, 2014, the lot size was reduced to 25.

Update:

Again in the year 2015, Nifty increased its lot size to 75.

Then the lot size of CNX Nifty in the F&O segment that is futures and options segment has been revised upwards to 75 from the current 25.

Also, the lot size of CNX Bank index (Bank Nifty) has been hiked to 40. Nifty Call Put.

These changes in the lot size came into effect from 28 August 2015.

The contracts which are having the maturity of September 2015 and October 2015 will continue to have the existing market lots until the expiry of F&O contracts for these two months. Nifty Call Put.

Call and Put Option

Just like any other stock you have a choice of two options – call option and put option. Nifty Call Put.

If you think Nifty may go up you should buy a call option, and if you think Nifty will fall you should buy a put option. Why?

Because the value of the call option will rise if Nifty goes up, and similarly value of the put option will rise if Nifty goes down.

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Nifty Call Put

You can also sell these options.

You should sell a call option if you think Nifty may go down, and you should sell a put option if you think Nifty may go up. Nifty Call Put.

In technical terms – the buyer of the call option is long call and the seller of the call option is a short call.

Similarly, the buyer of a put option is long put, and the seller is short put. Nifty Call Put.

FEATURES OF CALL OPTIONS:

Premium:

Stock and Index Options: Depending on the underlying asset, there are two kinds of call options – Index options and Stock options. Nifty Call Put.

The option can only be exercised on the expiry date. While most of the traits are similar.

Seller’s Premium:

You can also sell off the call option to another buyer before the expiry date. Nifty Call Put.

When you do this, you receive a premium. This often has a bearing on your net profits and losses.

Nifty Call Put Techniques

When you sell a call option and Nifty goes down, the option premium will get reduced, then you can buy back your option at a profit. Nifty Call Put.

Nifty Call Put

However, what happens when you are wrong and Nifty keeps going up after you have sold a call option?

You are at unlimited risk because you don’t know where the Nifty bull run will end. Nifty Call Put.

In that case, you must take a stop loss or hedge your position.

Similarly, if you have sold a put option and Nifty continuous its slide downwards, you are again at unlimited risk as the put option will keep rising. Nifty Call Put.

Here too you must buy back your options to limit your losses. Digital Marketing Training Indore.Nifty Call Put.

No, it does not mean that you will not make a loss if you buy an option – you will make a loss if your view goes wrong whether you buy or sell an option.

The only thing is whatever you do you should be ready to take a stop loss if your views have gone wrong.

Nifty Call Put Technical Analysis

So here is what you can do according to your view:

1. Bullish on Nifty: Buy Call Option Or Sell Put Option.
2. Bearish on Nifty: Buy Put Option Or Sell Call Option.

Whatever you do you will be required to pay a margin. Nifty Call Put.

Nifty Call Put

When you sell an option depending on which option you are selling and the current volatility – your margin may differ from 13,000 to 15,000 for one lot. Nifty Call Put.

The riskier the option, the more margin you pay. Nifty Call Put.

When you buy an option you only pay the premium and that’s your only risk.

For example, if Nifty is at 8000, the 8000 Call Option will be around 150 if one month is left for expiry.

So to buy one lot you need to pay 150 * 25 = Rs. 3700.00. Nifty Call Put.

Now if Nifty goes up to 8100, the call option will be up by almost 40 points so you can realize a profit of 40*25 = Rs. 1000.00. Nifty Call Put.

Interestingly you would have realized almost the same profit had you sold one lot of put option at 8000 and bought it back at 8100 – but (very important) if enough time passes away then the call option buyer may realize a small profit, but the put seller may gain a lot of points. Nifty Call Put.

In fact, if on expiry day Nifty is at 8100, the call buyer will lose money because the value of the 8000 call option will be 100.

Nifty Call Put

The trader bought it for 150, and now he has to sell it for 100 for a loss of 50 points. Nifty Call Put.

However, the put will expire worthlessly and the put seller can keep all the premium he got for selling the put. Nifty Call Put.

This is the main reason why option buyers find it hard to make money. Nifty Call Put.

BUT if Nifty falls, the call buyer will only lose the money he paid to buy the 8000 calls, however, the put seller will be at an unlimited loss. Nifty Call Put.

Call and Put Tips

Now after reading all this you must be thinking that selling an option is an unlimited risk and buying an option is a limited risk so one must buy an option. Nifty Call Put.

Well, the unlimited risk is only on paper. If you have a stop-loss in the system it will take care of itself.

And its the same with buying options. Nifty Call Put.

One thing I forgot to mention is that when you sell an option, you get a premium the very next day in your account. Nifty Call Put.

If your observation was right you can keep the entire premium and that’s your profit.

Nifty Call Put

Yes, profit in selling an option is limited to the premium received and losses are unlimited.

When you buy an option the risk is the premium you paid and profits are unlimited. Nifty Call Put.

However you make money only if Nifty moves in the direction you predicted, else you may lose money.

It is therefore very hard to say if buying an option is better or selling is better. Nifty Call Put.

In both the cases to win, your viewpoint must be right or else you may lose money.

Myths About Market

There is a myth going in the markets that institutional investors always sell and retailers always buy.

This is not the case. No studies have been done on this so no one for sure tells who actually sells or who buys. Nifty Call Put.

But this is true that institutional investors have money and when they sell options they do it huge.

They mostly hedge their positions. Nifty Call Put.

For example, if they buy some stock, they may sell Nifty Call Options to hedge their position, in case the stock falls, it is almost certain that Nifty will fall and call option will give them some profit.

Nifty Call Put

This is just an example please do not try this as institutional investors have lots of data to take action, you may not have such data and you may suffer losses. Nifty Call Put.

They have software that indicates them to take a certain action. Most retailers just speculate and suffer losses. Nifty Call Put.

Nifty Call Put Prediction

The Nifty Call Put prediction can be done on the basis of the market study.

If you are unable to find any decent pullbacks in nifty future, then you can always look at its stocks.

There’re 50 stocks in nifty, you can check the daily chart of a few of those stocks and surely you will find one/two such stocks every month. Nifty Call Put.

The golden rule of options trading lies in trading in the direction of a medium-term trend if you are buying, or look to go against the trend if you are writing options. Nifty Call Put.

Also, avoid overtrading, as many discounted brokers offer less brokerage.

However, Nifty Call Put can be bought for the near month and for the next month.

From the next-to-next month onward, the liquidity starts to fall.

Nifty Call Put

And that is a problem because you may not get a call or a put at the rate that you desired because there may not be enough sellers or buyers.

Therefore its advisable that you play in current and/or next month options only.

Remember that time value effects most in the near month (current month) options.

Therefore some people buy next month options to beat time value.

It all depends on what you want to do with options.

If your view is only for the day (intraday) its better to buy near month options as their value changes fast and you should get the value you were looking for.

However, if you have taken a risk with two months in mind you should buy/sell the next month options as you will have enough time to realize a profit.

So what you do? Do you sell options or buy options?

Whenever you do, if you are losing money trading options you can take our Nifty Call Put Tips for high success rate and very low risk.

Nifty Call Put

Nifty Call Put Chart Analysis

If you are playing intraday, you know the fact that intraday trading is not always suitable to make a profit.

But if you know the basics of support resistance and Fibonacci retracement you can make a daily profit from intraday trading.

Now you have to observe an intraday chart that you can see on your online trading platform, just open the intraday chart and you are done.

So, now let us learn some basic rules of support resistance:

1. When support breaks it becomes resistance and vice-versa.
2. Number of times that (Support or Resistance) level is tested it becomes stronger.
3. Normally price action tests check to support and resistance before the breakout.

The rules we discussed above are very simple to use.

So, you can use them for back testing before we start actual trading.

When the live market is going on, first you should check support resistance level on the intraday chart and then take the trade.

If Nifty future breaks support level then it becomes new resistance so when nifty comes to this level trader can enter short for sure shot gain.

Nifty Call Put

Why should you trade in Nifty Call Put?

There are four benefits of trading in Nifty Call Put:

• Liquidity.
• You can trade from both sides.
• Low Brokerage.
• Less Volatility.

Liquidity:

In the derivatives market, Nifty Options and Futures are one of the most liquid contracts.

And it is very difficult to manipulate liquid contract.

So, it is safer to trade in liquid Nifty Options and Futures than in Stock Futures and Options.

You can trade from both sides:

By trading in Nifty Futures and Nifty Call Put, you can earn both ways irrespective of whether the market is moving up.

Low Brokerage:

Most brokers offer a low brokerage on Nifty Futures and Nifty Call Put than on Stocks Futures and Options.

However, this varies from institutions to institutions.

Less Volatility:

Individual stocks might show wild swings due to news, rumors, and other factors.

However, since Nifty is representative of just 50 stocks.

Any wild movement in one stock does not produce wild movement in Nifty.

This makes it easier to study and speculate the direction on which the Nifty is going as there is less effect of external factors if we look at the market broadly.

Nifty Call Put

Nifty Call Put Pricing:

Options prices are set after the buyers and sellers negotiate and settle on a price.

Prices of options are influenced mainly by the expectations of future prices of the buyer and sellers and the relationship of the option’s price with the price of the instrument.

An option price or premium has two components:

• Intrinsic value.
• Extrinsic Value.

Intrinsic Value:

The intrinsic value of an option is a function of its price and the strike price.

Strike price or exercise price is the predetermined price upon which the buyer and the seller of the option have agreed.

 

Each option on an underlying instrument shall have multiple strike prices.

The intrinsic value equals the in-the-money amount of the option.

The time value of an option is the amount that the premium exceeds the intrinsic value.

Time value = Option Premium – Intrinsic Value.

Factors Affecting the Price of an Option:

There are four major factors which influence the price of an option-

1. Firstly, the price of the underlying stock.
2. The strike price of the option itself.
3. Further, the time remaining until the option expires.
4. The volatility of the underlying stock.

Nifty Call Put

Lack of trading education is a dangerous state to be in.

Thoroughly educating yourself in all aspects of Nifty Call Put is crucial to excelling in this profession.

Be wary of the psychological aspects of the market, the correct risk management system, and the correct entry and exit methods.

Terms Related To Nifty Call Put:

Options Expiry:

Options have an expiry period, so if the Nifty is not trading In-The-Money, your option may expire worthlessly.

In such cases, if you know that 500 points movement you seek may take 20 days, while current expiry only left with 10 days, go and trade in the next month contract.

Trade the Cycle:

Nifty options trading cant be done every time.

Means there are times when you should be aware that a Trade-able Cycle will be due after maybe 7 days, don’t take any position till that time.

And when the time comes to trade the Cycle.

I have shown Cycles in the below Daily Chart of Nifty, which are somewhat very similar in duration.

Nifty Call Put

Just sit aside when there is no trend:

As per Gann Methods, the tops are rarely spiky meaning that there is a distribution phase on the tops and a lot of sideways movement takes place.

So you should be aware on Tops that you are not stuck on sideways movement.

60–70% times market is sideways:

You need to understand that Nifty is in the sideways trend for 60–70% times.

So you will have to be disciplined when trading in Nifty options on the Buy side.

(I am assuming you are talking about earning by buying the options and not selling, coz option selling requires capital like 10 Lacks minimum).

Cycle Identification:

Very Simple and Effective Method.

This is a real example of Nifty Check on the Nifty charts. If the market is in Bearish mode.

I mean if the high made is lower than the previous high and Nifty Starts moving down breaks the previous low, this means the trend is down.

Now measure the low to a low number of days, suppose its 20, again measure low to low it is 25, you have caught the rhythm or vibration of this cycle.

Nifty Call Put

You know now that there is a high probability for nifty to make the next low between 20–25 days.

Look to cover your shorts in this area.

The same thing could be done for high to high.

Nifty and Planets: 

Try to learn about the Planet Combinations which are the cause of change in trend in Nifty. 

This may help you to prepare in advance and take the position in advance.

If you want you can click on this link to know more about Planetary Cycles in Nifty.

Know yourself: 

Ask yourself that, How much time you could dedicate to Trading?

I will tell you fast decisions are usually wrong decisions.

I know my temperament and hence I take time to think about a trade many days in advance before making a trade.

The ticks of up and down are very addictive and people waste their entire day in front of terminal and end of the day not able to take home any profits.

Nifty Option Strategy

Among all the strategies, short strategies/premium-selling strategies have the highest probability of winning.

Nifty Call Put

However such strategies would need margin money and hence a higher capital requirement.

The good thing is these strategies are pretty passive and do not require active adjustments.

For traders who do not have the inclination or capacity to sell premium, another high probability method is Scalping ATM strikes. Nifty Call Put.

It’s also more tax efficient in India to scalp options compared to futures.

But, this is a big BUT – There is a skill involved here and the mastery of that skill needs time.

It is also a lot of hard work since it requires you to be in front of the screen all the time and can be stressful.

Nifty Call Put.

You could follow any of the above or a mix of both to earn money trading options.

I personally use the second methods as I am able to consistently get better returns compared to using options strategies. Nifty Call Put.

But then I know people who make similar returns using options strategies.

So I guess it boils down to what suits you and where do you see an edge for yourself.

Calendar Spread Strategy

The calendar spread strategy involves the options of the same underlying asset, having the same strike price but should not have the same expiration dates.

Nifty Call Put

You can implement the calendar spread strategy by simultaneously selling near-term expiration cycle calls (or puts) and buying long-term expiration cycle calls (or puts). Nifty Call Put.

1. Same strike price.
2. Either both calls (or both puts).
3. Sell near-term expiration option.
4. Buy long-term expiration option.

The underlying key concept of this strategy is that the time decay happens much more quickly the closer we get to the expiration.

Therefore, the decrement or the fall in the price of the option due to theta will be higher for the near-term option than the long-term option.

Further, you can also use this strategy to take advantage of the increase in the implied volatility of the options.

 

Also, we have discussed above that the impact of the volatility on the option price increases as time left to expiry increases.

So, in the calendar spread strategy, the increase in the implied volatility will have the positive impact on the strategy and decrease in implied volatility will have the negative impact.

Thus, the calendar spread strategy is invented to take advantage of the short-term time decay and the increase in implied volatility.

Nifty Call Put

Let us understand this through an example. Nifty Call Put.

Suppose the Nifty Index is trading at 10000 points.

We enter a trade by simultaneously selling the Dec 10100 call for ₹100 and buying the Jan 10100 call for ₹200. Nifty Call Put.

The total premium paid to enter the trade is ₹100 (₹200 – ₹100).

Nifty Index: 10000

Positions-

1. Sell NIFTY Dec 10100 Strike call @ ₹100.
2. Buy NIFTY Jan 10100 Strike call @ ₹200.

Total Premium paid is ₹100.

On the expiration of December short call, let’s assume the Nifty is at 10000. Nifty Call Put.

The Nifty Dec 10100 strike call expires worthless and we keep the premium of ₹100.

Now, for the long Jan call, the time value or theta will have a negative effect on the option price and the option will lose money. Nifty Call Put.

Also, depending on the implied volatility, the price of Nifty Jan 10100 strike call will be different in different scenarios as discussed below.

Scenario 1: Implied Volatility Decreases.

Since there are only 30 days left for the Nifty Jan call option to expire and the implied volatility has decreased, so, the price of long call option also decreases. Nifty Call Put.

If the long option price decreases below ₹100, i.e. the premium paid, and then we make a loss.

The overall profit and loss of the strategy will depend on the loss on the long call.

Nifty Call Put

Scenario 2: Implied Volatility remains same. Nifty Call Put.

If the implied volatility remained the same, we can lose money only due to the theta.

The overall profit and loss of the strategy will depend on the loss on the long call.

Scenario 3: Implied Volatility Increases.

When the implied volatility increased slightly, it may cancel out the effect of theta on the long call. Nifty Call Put.

If the volatility increased too much, it may surpass the premium eaten by the theta or time value and we can potentially make a good profit. Nifty Call Put.

This is the best situation where we can profit from both long call and a short call.

Maximum Profit:
The maximum profit potential of a Calendar spread cannot be calculated as both options are in different expiration months.

Downside Risk:
The Downside risk of a Calendar spread cannot be calculated as both options expire in different months.

Conclusion:
A Calendar spread is more of a volatility play than anything else.

Calendar spread can be done when we expect the implied volatility to increase in the future.

Here is the strategy which can make easy money regularly with technical analysis.

Requirements of the Strategy:

• Use a one-minute Futures Chart. Nifty Call Put.
• Plot 10Day Close EMA as White and 21Day Open EMA as Red.

Nifty Call Put

• Draw the Fibonacci Retracement for 9:15 – 9:30 AM low to high or high to low (Refer video above how to draw the Fibonacci Retracement).
• Select a Call Option Strike Price in the range of 60 – 110 premium price which is apt for movement in this case.
• That’s it. You are all set for the Strategy. Nifty Call Put.