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How Nifty Options Settlement Is Done

This post discusses how Nifty Options settlement is done.

First thing you must know is that in India Nifty options are cash-settled. These are European-style settlements. A cash-settled option is a type of option for which actual physical delivery of the underlying asset or security is not required. The settlement results in a cash payment + brokerage and taxes, instead of settling in stocks, bonds, commodities or any other asset. In India, options are allowed for trading before expiration (American style). Which means a trader can buy/sell an option and finish the trade before expiry ant time he/she wants. However, in European style cash settlement, the option contract owner is required to hold until expiration. read more

This is a very common question befalling option buyers since ages. After paying the huge premium and the stock moving in the direction of the option bought if the option buyer sees a loss in options bought they get stressed and start thinking what wrong they did.

This is especially worrisome for novice options traders who just came into the options business. They get worried about seeing a huge decline in option premium if the stock stays in the same place or move slowly in the direction of the option bought. So they ask themselves or their mentors/brokers or keep searching online – why my option declined in price when the stock moved in my option buy direction? read more

Tips On Selling Put Option

Selling a put option is a slightly bullish strategy wherein the stock has to move up else the put seller may face a loss. Its better to sell a put option slightly OTM – Out of The Money. You must have read in lots of places that its better to sell an ATM (At The Money) put option, but my experience has been good with selling put options slightly out of the money. Out of the money put option gives you time to decide to book profit or take a stop loss.

Suppose you are very bullish on a stock then there are four things you can do: read more

You Must Add Bank FD Interest in Your Loss

When you lose money trading in stock markets – its just not the loss you must add the interest lost had you kept that money in a Bank Fixed Deposit.

Read this email I got:

Hi Dilip Bhai,

I was a regular trader in the stock market but form 2005 to 2007 after that I had lost my all money in the crash, which is around Rs.15 lakh. If I invested that money in FD that would be more than 40 lakhs. Just think what I lost in this market. Then I stopped trading for 10 years and I thought I need more education to trade in stock market and I found a teacher who taught me trading in option with hedging option and hedging option with future, pair trading in options, arbitraging with current and next month future, time decay technics with current month and next month option selling, 22 ways of option hedge trading like butterfly, collar, condor, straddle, strangle but ultimately none of them can make money for me. Now my experience is this that somehow market will fetch money from the trader, no trader can earn from this market for a long run, may be 5% of trader are exceptional or lucky or punter what ever. Honestly do you think I need to learn much more or to quite for ever. read more

Date of posting: 04-Jul-2019

Its strange that tomorrow is Budget 2019 and INDIA VIX has actually dropped:

INDIA VIX 04-JUL-2019

INDIA VIX 04-JUL-2019

Usually, INDIA VIX increases prior to budget or an event day and then drops after the event is over. But this time it’s different.

I think the reason is that India already knows what’s there in the budget because the interim budget has already been presented on 1 February 2019. Due to the General Elections to be held in Apr-May 2019, The Interim Union Budget of India for the year 2019 was presented by acting Finance Minister Piyush Goyal on 1 February 2019. read more

A lot of traders move from buying options to selling options. Though in India since margin blocked is too high to sell options, many traders are unable to sell it. Moreover many traders do not want to sell options as they think its unlimited loss.

Huge margin blocked plus the unlimited loss combined effect stops many option traders to sell options. Some who want to sell, do not have the money to sell options, and those who have do not want to sell because they cannot overcome the fear of unlimited loss hovering their minds plus the greed to make unlimited money stops them from selling options. read more

Trades wait for result season to trade the long straddle or long strangle in options to take benefit of the stock move either up or down.

If you do not know what is long straddle or long strangle you can read the following articles:
https://www.theoptioncourse.com/how-to-play-a-long-straddle/

https://www.theoptioncourse.com/how-to-trade-long-strangle/

Novice option traders do not know that Theta or time value is a very important factor in options premium. If you do not know Option Greeks you can download this file here: read more

Agreed we all trade to make money. But what if it’s taking too much of your time? A full time trader may be able to give time to trade but what about those like you who have a full time job. Can they trade full time?

The answer is yes. Which my nifty course you need not keep looking at the trade 24*7. Just twice a day is enough.

But there are many who trade time for money forgetting that the trades are affecting their jobs. I got sacked on the job. I was caught red handed trading stock markets while on job. In those days there was no way to trade stock markets on a smart phone… Now days it’s easier. read more

Trading is very stressful no doubt because it’s uncertain and risky. One day you make money and another day you lose. But still you cannot take your hands off trading as you get tied to this habit. There is ego clash, wins, defeats all this leads to anxiety and stress.

You can use these techniques that can lower stress levels and make you less anxious in your decision making.

Why do traders get anxious while trading?

Because they are uncertain about the results so they are worried, nervous and uncertain about the outcome resulting in stress. read more

15 Lakh Loss Due To Tip Providers

How many of us keep getting calls from advisory/tip service providers promising huge returns from the markets?

I fail to understand how they get our phone numbers? Have you noticed they do not know our names? They start with do you trade stock markets?

Anyway before I say anything you can see this email sent to me. This person is in deep debt. Lost 15 Lakhs in stock markets because he took tips from advisory companies.

His email:

Sir,
Due to heavy loss in the market due to wrong directions given by so many tips providers, I am not in a position to invest a huge amount right now. Currently my demat balance is only Rs.10,000. I have gone through your mails that the required amount to invest is Rs.75000/- or above. That is why I have not subscribed with you, because suppose after my subscription you would advise for hedge trade which is not possible for me as far as my investment is concerned. Any how I shall try to join with you very soon.
Siva. read more

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