3% Nifty Option Strategies Trade Limited Profit & Loss – TheOptionCourse.com

First what is physical delivery of stocks in options & futures (derivative) trading?

All over the world, on the expiry day derivatives are either settled by cash or stocks. Until June 2018 in India all derivatives – options and futures were cash settled. Well no more – Securities and Exchange Board of India has introduced long awaited physical settlements of stocks from July 2018 in 46 stocks only (list below), but soon I assume all the 170+ stock F&O contracts will be physically settled. From July 2018, there will be physical settlement in equity derivatives (options and futures both). read more

You need to know more than Delta, Gamma, Theta to be a good option trader. To be honest Delta, Gamma, Theta are just the theory on how options are made – they do not give direction of options. You can download a file here where I have explained in details about Delta, Gamma, Theta of options. But this is theory after this you need to learn strategies to make monthly income.

See this chat where this person is failing to make profits even after knowing about Delta, Gamma, Theta:

I keep getting calls from some option traders like Sir I am shorting an option with Delta 0.4 – will this make profits for me. read more

Hedging is an insurance of a trade which comes into action when the original trade starts losing money. Hedging is a great way to protect your capital when trading or your portfolio as a whole.

Do you know that HIIs (High-Net-Worth Individuals) and DIIs (Domestic Institutional Investors) & FIIs (Foreign Institutional Investors) always hedge their portfolio against any odds. It does not matter they pay a price for hedging but they know very well the importance and necessity of hedging. They have crores at stake they are not fools to trade derivative naked (without hedge). read more

A lot of traders who call me to inquire about my course ask me this question after I tell them about the course – “I want to become a full time trader, I want to make trading my profession – is it possible?”.

Well the answer is yes, but there are certain criteria.

1. What experience you have in trading? 5 years or more is good.

2. Are you trading on tips or advisory service? If the answer is yes you will never become a full time trader. Tips/advisory service do not work and will never work in stock markets. read more

When there is no movement in Nifty it becomes very difficult for option traders to decide what direction to trade – in fact same for future traders. See this:

Nifty 25-06-18

Its like a small mountain – down, then up, then down, then up, but over all its just 26 points move – so which direction to trade?

This is confusing for traders.

This is the reason trading volume in derivatives drop when there is little movement in Nifty. By looking at the intraday chart most traders will buy puts only to see Nifty rising to hit stop loss and then fall. read more

In this post you will learn 10 rules of successful trading.

Problems start from misconception of share market. It all starts with “Share Market is Gold – I will invest and become very rich very soon and leave my job”. Well dreaming is ok but over-dreaming is not.

Its not the fault of a new investor or trader – the way things are marketed – its their fault – the media and people who get benefit from your trading like tip providers, trading software providers, high cost brokering firms etc. read more

It’s a myth that technical analysis works great in stock market trading. Technical Analysis is just a beautiful drawing of the past but not an assurance of the future. Otherwise all technical analysts would have been sitting in huge pile of cash trading the stock markets. But this is not happening.

There was a time when I used to believe a lot on technical analysis but I saw that it had a success rate of only 50%.

If you also trade on 5 min candle stick charts you will know what I am saying. TA is a beautiful presentation of what is happening in the markets but NOT what will happen in the markets. read more

In this article you will learn how to trade using the risk to reward ratio.

Risk to Reward Ratio is the concept where a trader knows before taking a trade where to take a stop loss and where to take profits out.

A novice trader never writes anywhere before taking a trade where to take a stop loss. However an experienced trader knows very well what risk he is taking in a trade and what reward he is expecting. An experienced trader will never move away from a decision he/she takes.

Let me take an example of a Long Call. Let us assume that Nifty ATM CE is trading at 100. A novice trader will buy it “thinking / hoping” that Nifty will move up without realizing that options have time value that melts away with time if there is no move. They treat an option buy equal to futures buy which is not. read more

One of the best ways to short stocks, nifty or banknifty is on a bad news. I am a great fan of bad news. See this chart of PNB after the news came out of the Nirav Modi scandal. The Punjab National Bank scam came to light on 14 February 2018, and since then it has been a downhill ride for the Indian Banking community especially PNB – Punjab National Bank.

See the downhill chart of PNB from the news came out:

PNB Stock Chart 13-Feb-18

The downhill continues for months for PNB:

PBN on 18-May-18

It is almost certain that a stock will fall heavily when bad news hits the company. Resignation of a top manager, employee specific scandal, tax hiding getting caught (like Satyam), any illegal activity – even a small illegal activity will take the stock down by 5%. read more