3% Nifty Option Strategies Trade Limited Profit & Loss – TheOptionCourse.com — Get limited profit and loss nifty options trading strategies free to make monthly income.

Total Confusion In The Stock Markets What To Do

by Dilip Shaw Date: April 7, 2025

Date of post: Monday – 07-Apr-2025.

Donald Trump’s tariff plans and his actions have confused investors. Everyone is panicking and taking out money from stock markets.

This is what happened today:

What can you do?

Do not panic – making decisions based on a confused mind will only lead to losses. Wait for 2 days and see if you have taken a decision that needs a review. If yes think again and then take a final decision. Please note that holding on to a trade/stock is also a decision. Just buying or selling is not a decision. Probability holding may be the best decision than exiting a trade.
Invest – If you have money in debt / FDs / bank account you can invest in good stocks. You will get fundamentally strong stocks at a huge discount. Go ahead and do discount shopping.
Create spreads – This is a great way to hedge options and futures.
Only do HNI Iron Condors – Keep yourself safe and trade safer condors.

If you have not done my course where I have taught HNI Iron Condors you can contact me.

{ 0 comments }

Bad Days In Stock Markets Are The Best Days In Stock Markets

by Dilip Shaw Date: March 10, 2025

in Stock Markets

For most investors, a falling market is a bad market. They panic and exit.

The recent one is the pandemic period from 2020 to 2021. Yes but was that the only fall?

What about:

- - - The Dot Com Bubble of 2000
    - The Real Estate Bubble of 2008
    - The pandemic period of 2020
  History is full of such huge crashes. But the markets rebounded strongly after a crash. Still, people do not learn from others’ mistakes.
  
  Agreed, in 2000, the penetration of the Internet was low, so it was difficult to know what to do in a crash. But by 2008, almost every investor had a laptop or desktop with an Internet connection at home or in the office.
  
  The Internet and YouTube were not as big as they are today (2025), but still with some effort one could easily find out what ought to be done and what not to be done.
  
  Still, investors made mistakes. Count me in J. Had I held on to those stocks my profit would have been more than 10 lakhs on 50k invested. Unfortunately, I got panicked and took out 7k from the markets – thus losing 43k in the process.
  
  But what about the crash we are facing today? It is just about -13.70% down from its recent peak on 27-Sep-2024.
  
  On 27-Sep-2024 the closing price of NSE was 26178. Today while writing this post – it is at 22589. This is -13.70% down. And you know what – this last five straight months of decline for Nifty is the worst losing streak since 1996.
  
  And here are some headlines that I am reading on investors’ behaviour:
  
  Foreign investors are pulling money out of Indian stocks
  
  Investors pull out of US equity funds for a second successive week
  
  FPIs pull out Rs 24,753 crore from equities in the first week of March
  
  You may think FIIs are pulling out therefore Indian retail investors are also pulling out. The fact is they were doing the same in 2000, 2008 and 2020. And they will come back again soon if not very soon.

Those who will keep patience now will end up making money and those who exit in panic will repent.

So during these times, it’s always recommended to stay invested and if you have money to invest then invest in good quality stocks.

To Conclude:

A stock market crash is an opportunity to buy not an opportunity to sell.
Stay invested if you cannot afford to buy more.
Bad Days in Stock Markets are the Best Days in Stock Markets.

If you want to do my Conservative Options Course you can write to me at dilip@theoptioncourse.com.

{ 0 comments }

Do Not Lose Patience When The Stock Markets Are Falling For A Long Time

by Dilip Shaw Date: February 23, 2025

in Investments

Date of post: 23-Feb-2025

The markets have been falling for six months now. I am sure many investors who bought stocks when the markets were at their peak (Aug-Sep 2024) must be regretting their decision.

But here is where the stock markets test your patience.

If you lose patience and sell stocks at a loss now, you may do more damage than staying invested.

This phase will come and go but once you take a loss the recovery can be even more painful.

My advice is to stay invested if you do not need the money. If you need then exit from the stock which is making a profit even if small, or the one which is losing the least among all the stocks in your demat account.

{ 0 comments }

What To Trade When The Union Budget Is Near

by Dilip Shaw Date: January 28, 2025

in Stock Markets

What Should You Trade When The Union Budget Is Near?

The financial budget day is almost here. It will be presented on Saturday – February 1, 2025, at 11 a.m.

Markets are closed on Saturday but on Budget Day 2025, the stock market will be open for trading from 9:15 AM – 3:30 PM.

Q) Should you trade on Budget Day?

Ans) Of course not if you are averse to volatility, but if you are willing to take risk, trade Intraday only.

Q) What should you trade on Budget Day?

Ans) Stock markets will be very volatile on that day. Every stock, index and commodity will move randomly. No technicals or even logic will work. No kind of prediction will work. So here are a few things you can do:

1. Equity – If a fundamentally strong stock falls due to some budget news, do not worry the fall is temporary. You can buy the stock.

2. Derivatives – DO NOT SELL options on that day even if you are an expert. Just buy options for the risk you are willing to take. As far as the trend is concerned go for the current trend – do not take a counter trade. Trade one lot only.

If you want to trade futures, trade with a single lot only. You can keep a profit target of 100 points and stop loss of 50 points if trading in Nifty. If trading Banknifty then keep a profit target of 500 points and stop loss of 250 points. Set both profit and loss in the system. This broker allows keeping both the targets (profit and loss) in the system. This is called OCO (One Cancels the Other) trade. If the profit is achieved – the system will automatically cancel the stop-loss trade and vice versa. Click here to open an account – it is free to open an account.

Once the trade is live do not look at the trade as either profit or loss will be hit and you will know anyway so why panic unnecessarily?

The max profit in Nifty will be 75 * 100 = 7500, and
The max loss will be 75 * 50 = 3750.

The max profit in Bank Nifty will be 15 * 500 = 7500, and
The max loss will be 15 * 250 = 3750.

Take the trade only if you are comfortable with the max loss. Otherwise do not trade. If you want to keep a smaller stop loss it is not recommended as on a volatile day a small stop loss is likely to be hit.

Whether you are comfortable with the profit or not does not matter – your focus should be on the loss, not the profit.

Q) What will happen to INDIA VIX?

Ans) INDIA VIX will keep increasing and may go up to 22-25 on the Budget Day. Then from the next day onwards, it will keep decreasing. Even though INDIA VIX is inversely proportional to Nifty – on times like these this does not apply. What happens is unusual trading starts when the budget comes near leading to an increase in INDIA VIX. Once the budget is over these panic / speculative trades start decreasing bringing down INDIA VIX.

So yes, INDIA VIX will increase, but you should think about your money. As written earlier, either avoid trading near the budget days (from 3 days before and after the budget) or trade with one lot only. As far as equity buying is concerned, it has nothing to do with INDIA VIX.

Q) Should you constantly listen to the budget and take trades accordingly?

Ans) You will not win a million dollars if you do this. For money that will not make or break your life, it is not worth wasting time listening to the budget and taking action. You can always read the budget and its implications on the economy and business later in the day.

Of course, after reading the budget if you feel certain sectors may benefit you can buy stocks of companies that may benefit from the budget.

{ 0 comments }

India VIX Is Increasing

by Dilip Shaw Date: January 23, 2025

in Newsletters

P.S.: This is a copy of the email sent to my subscribers on Thursday, 23-Jan-2025. If you want to receive my emails, please register your email using the form above.

India VIX for some strange reason is increasing. This is good for option sellers – you will get a good premium.

At the time of writing this email India VIX was:
16.84
It is +0.062 or up by 0.37% since last close.

You can see real-time India VIX here:
https://www.google.com/search?q=india+vix+today

The reasons why India VIX is increasing could be due to the elections in Delhi on Wednesday, 5 February 2025.

Usually, state elections do not affect market volatility much. But this is not the only factor.

Donald Trump becoming US President and taking stringent actions on Day 1. His actions included everything from economics to border issues etc. This is a major reason for an increase in India VIX.

No one knows what lies ahead. So there is panic in the markets which has resulted in an increase in India VIX.
Trade with strict stop loss and hedge.

If you want to learn options strategies with proper planning and hedging you can do my paid course.

{ 0 comments }

Everything About Earnings Per Share EPS

by Dilip Shaw Date: December 19, 2024

in Stock Markets

What is EPS?

EPS is a financial metric that indicates how much profit a company makes for each share of its stock.

To calculate EPS, we must divide the company’s net income by the total number of outstanding shares.

For example, let us assume that company XYZ’s net income is 100,000 and its outstanding shares are 100. Then its EPS is 100,000 / 100 = 1000 per share.

This does not in any way mean that everyone holding its share is making Rs. 1000/- profit per share but it means that the company is earning 1000 per share.

EPS gives a good indication of the financial health of the company but it still does not indicate the future growth of the company.

EPS indicates how much profitable a company is and how much each shareholder would receive if all the net income were distributed as profits. However net income is never distributed as profits but dividends are given on income made.

It is out of the scope of this post to discuss how dividends are calculated. I will post some other day.

Other than the options course I also have a course where I teach how to select stocks to invest for the short term 5-6 months for good returns. Let me know if you are interested.

{ 0 comments }

Double Calendar Spreads Explained

by Dilip Shaw Date: December 2, 2024

in Strategies

In this article, I will explain how to set up, and when to use a Double Calendar Spread.

What are Double Calander Spreads?

It is an option strategy where current month options are sold and far / next month options are bought to protect the losses from huge movements. Selling the current month options is the original trade and buying far month options is the hedge trade. The hedged trades act as a protector.

What strikes are used in Double Calander Spreads?

The same strikes for calls and the same strikes for puts are used.

For example, if you have sold a call option of a stock’s 1000 strike of this month, you must buy a call option of its 1000 strike for the next month. And if you have sold a put option of the same stock’s 950 strike of this month, you must buy a put option of its 950 strike for the next month.

When a Double Calander Spread be traded?

When the VIX (volatility index) is low. You can check INDIA VIX here. Trade a Double Calander Spread when INDIA VIX is below 14. Trade it preferably near the expiry of the current month.

When does a Double Calander Spread make a profit?

A double calendar spread will profit when the stock/index expires near the sold call or put option or it can profit if the stock expires anywhere between the sold strikes but the VIX increases.

When the stock expires near the call or the put option sold, this is what happens:

The sold options expire worthless, and the bought option’s total premium would not have lost too much value because one of the strikes would be in profit due to the direction being on its side. The other bought option would not have lost much value since 30 days are still left for the expiry.

As written above, it will also profit if the VIX increases and the stock/index is anywhere between the sold call and put strikes.

When this happens, both the sold options expire worthless. This pair makes good money for the trader. Due to the increase in VIX, the bought options do not lose much due to theta decay. The premium loss is compensated by the increase in volatility. So the profit from selling the options is more than the losses made by buying the options. Overall the trader is in good profit.

When does a Double Calander Spread make a loss?

If on the expiry day, the stock is above either the call or the put sold strikes. However, since there is a hedge (the bought options), the losses are reduced to a large extent.

If the stock moves too early just after the trade, the trader may get panicked and get out of the trade at a loss. Therefore the trade should be planned well in advance. The trader should know the risks involved in the trade before taking the trade.

There is a platform Sensibull – India’s Largest Options Trading Platform which makes a max profit and loss graph of a trade in advance that a trader plans to trade. This is possible only in the paid version of the platform. The paid version costs Rs.800/- per month. However, if you open an account with this broker you get all the paid services of Sensibull for free.

Conclusion:

Trade Double Calander Spreads when you feel that at least till the expiry the stock you wish to trade on is not going to move much. Do not trade Double Calander Spreads near the result season. During the result season, too many speculative trades take place and almost all stocks witness volatility. Also, avoid trading in stocks going through any kind of news either good or bad. Good news will push the stock north and a piece of bad news will pull the stock towards the south direction which is bad for a Double Calander Spread.

Recommended article:

How to trade neutral calendar spreads

P.S.: I have a paid course on conservative option trading strategies. You can see the details here and check the testimonials here. If interested you can WhatsApp me or email me.

{ 0 comments }

The Right Approach to Investment

by Dilip Shaw Date: November 30, 2024

in Investments

For many years country’s strong inclination towards fixed-income investments like FDs and PPFs has not changed much. This is good, however, slowly things are changing which is not good. The new generation even the generation born in the late 90s and thereafter shifted their inclination from fixed and guaranteed returns to very risky investments like cryptocurrencies and short-term investments like equity intraday / few days holdings or derivative trading.

Nothing wrong with this but the problem comes when the investors put all their eggs in one basket.

You will find people who invest everything in guaranteed return investments and then some who have invested everything into equities and/or derivative trading.

Either of the above is not good.

The right approach is a balance of equity, derivative and debt. 50% of your savings should be in debt, 30% in equities long term and the rest can be used for derivatives/crypto/commodities whatever you want to try.

As you can see if you follow the above approach, 80% of your savings will be safe and generate good returns. In such a situation even if that 20% generate or do not generate any returns you will still be safe.

I hope you will follow this approach. Let me know what approach to investing you follow.

If you want to do safe trading you can do my Conservative Option Course. It will make your derivative section of investments safe due to hedge.

{ 0 comments }

The Greed that NEVER Goes Away

by Dilip Shaw Date: November 3, 2024

in Newsletters

Yesterday, I received an email from a senior and highly educated executive. I noticed that even experienced people do not understand the financial markets and dream of things with no historical proof.

Everyone is greedy, including myself, but there must be some logical sense to that greed. Imagination beyond a limit can be self-destructive. Read the email to understand what I mean:

Here is my reply:

Thanks for your feedback, Mr. Gautam.

You have not mentioned making 1 to 6k daily on how much money?

Assuming it’s 20k and the mean profit is 3k then the ROI comes to 15% in a day. In 22 trading days, this equals anywhere between 250 to 350% in a month.

I have nothing more to say – the figure above is unsustainable in the long run.

No one in the history of options trading has achieved even close to this for the long term and no one will be able to do this ever.

Now coming to your question.

>>In your strategies, the profit is 3-5% only in a month. How can this discrepancy in profit be overcome with your strategies?

3-5% is NOT ONLY a month it’s quite big. It comes to 36% a year. Compare this to equity mutual funds which generate a 12% return a year.

So please think logically instead of letting your imagination go wild and start dreaming something unattainable. If you try – instead of making 6k a day you will start losing 3-4k a day.

If you still want to try take out 25k from your savings and start doing the intraday options trade as you have mentioned in your email. Do it unless you lose half then stop, or continue till you make above 100% a year. The latter will not happen.

>> My objective for writing this is to know whether any hedging or positional trade is in existence to earn an equivalent income or more compared to intraday option buying & that also with minimum investment & higher return.

No, there is no such strategy.

======================

What you can learn from this:

If you are still thinking making 5k per day is possible from 25-30k please stop dreaming. You will lose your hard-earned money. If you still feel you can just try with 25k and stop when you lose 50% of it.

{ 0 comments }

Index Options Contract Size Increased to 15-20 Lakh From 5-7 Lakh What To Do?

by Dilip Shaw Date: October 7, 2024

in Investments

The Securities and Exchange Board of India (Sebi) announced on Tuesday, 01-Oct-24 measures aimed at reducing undue speculation in FnO trading (mainly options) particularly from retail investors. They will be introduced in a phased manner beginning Wednesday, November 20, 2024.

Why did SEBI take these measures?

SEBI from time to time does research on various topics to find out what traders and investors are doing in the stock markets. You can find the list of all the research here. There are two research, results which prompted SEBI to take these measures. The links to the research are below:

Jan 25, 2023 – Study – Analysis of Profit and Loss of Individual Traders Dealing in Equity F&O Segment

Sep 23, 2024 – Study – Analysis of Profits & Losses in the Equity Derivatives Segment (FY22-FY24)

SEBI found out that over 91% of Futures & Option trades lost money trading in all the years in which the research was done. The data was taken from the top 10 brokers in India. Retail traders collectively made net losses amounting to a staggering Rs 1.81 trillion in F&O from March 2021 to March 2024.

SEBI wants to keep the retail traders away from Future and Options trading as much as possible so six measures were taken. These six measures aim to reduce undue speculation in FnO trading (mainly options) particularly from retail investors. The report is available here.

These six measures are:

1. Upfront collection of options premium:

Some brokers (not all as of Sep 2024) still do not collect the full premium for buying options for intraday trading only as of writing (Thursday, 03-Oct-2024). The margin they block is decided by the stop loss taken by the trader. Note that if there is no stop loss, then the full margin is blocked.

For example, today is the expiry day of weekly Nifty options. At 1.46 pm 3^rdOct 25300 CE (Call Option) has a premium of 19.5 and the lot size is 25.

Now assuming Amit trader thinks that Nifty will shoot up in the next 30-40 minutes and wants to buy this option to make quick money. He decides to buy 10 lots.

So the margin blocked should be 19.5 * 25 * 10 = 4,875.00

All brokers who block the full margin will block 4875.00. However, the brokers who give leverage on buying options in intraday trading will block only the maximum loss possible.

If the final trade is:

Buy 10 lots of 3^rd Oct 25300 CE and the stop loss is set at 15.5. then the max loss possible is

(19.50 – 15.50) * 25 * 10 = 1,000.00

Since options are highly liquid on the expiry day there is a 99% chance that if the price of the option drops – the stop loss will be executed.

Therefore the brokers who do not block the full margin will block only 1,000.00 for this trade. However, this will change if the stop loss is placed somewhere else.

Why do they do this?

To encourage their clients to trade more often. And this will help even a poor trader to trade options.

Well, the fact is they say this to advertise their product but in turn, it harms the trader but makes more money for the brokers.

However good thing is it will stop on Saturday, February 01, 2025.

How does it affect you?

Not much if your broker already blocks full margin to buy options intraday. However, if your broker blocked margin equal to the max loss, you have to trade less number of lots from Feb 25.

This is good news as 91% of option traders lose money trading options. Due to the leverage given they lose more, now if they still want to trade they will lose less.

Other measures are:

2. Contract size has now been increased to ₹15-20 lakh from 5-7 lakh currently for Index derivatives. The report does not mention anything about stock options. This is very confusing. Will write a detailed post if they only increase the contract size for Index options. The new contract size will take effect for all new contracts starting November 20, 2024.

3. No calendar spread benefit will be given on the expiry day starting February 1, 2025. I think they are talking about the margin benefit given on a spread.

A calendar spread is a strategy that involves simultaneously entering long and short positions on the same underlying asset, but with different delivery dates. This allows traders to offset risk between contracts and reduce margin requirements. However, on expiry days, the value of a contract expiring on the day can move very differently from the value of similar contracts expiring in future.

I feel this is done because, on the expiry day, the option premiums are just too volatile to offset the risk by buying an option expiring on a later date. Traders sell the options expiring the same day and to reduce the risk buy an option expiring in the next week or month. But the reality is the movement of the option expiring in a few hours is unpredictable and so volatile that a huge move will cause too much loss for the retail trader, which may not be compensated by the long option expiring next week/month. SEBI may have taken notice of this and have taken out the margin benefit given on calendar spreads.

This rule will reduce aggressive trading strategies, especially selling of options on the expiry days as full 15 lakh + 2% margin will be required to sell just one contact. The risk-reward ratio will be so pathetic that retail traders (especially those who used to short options on the expiry days) will now either become option buyers or will try some other strategy or may just stop trading (highly unlikely).

4. Intraday monitoring – 4 snapshots will be taken randomly and sent to the exchanges to monitor exchange set limits.

Purpose:
To prevent traders from exceeding permissible limits during volatile intraday sessions.
How it works:
The margin requirement for each snapshot is calculated, and the highest margin requirement is the peak margin.
When it will be effective:
The measure will be effective for equity index derivatives contracts from April 01, 2025.

This SEBI has done to ensure that even the small brokers who take benefit of no-monitoring to make money, follow the guidelines set by SEBI or lose their broking license. Now no broker can break the rule set by SEBI.

5. An additional 2% Extreme Loss Margin (ELM) on all open short options on expiry days will be required. This is done to reduce speculative trading on the expiry days.

This rule will apply to options held at the start of the day and new positions created throughout the trading session.
The rule is intended to protect against the high volatility that often occurs on expiry days.
The rule will take effect on November 20, 2024.

6. Each exchange can have ONLY ONE weekly expiry contract from Nov 20, 2024. I think Nifty will keep The Nifty weekly expiry as it is the most popular weekly expiry. Bank Nifty, Nifty Finance and others will have only a monthly expiry.

Update on 18-Oct-24:

NSE is discontinuing weekly option contracts in the following indices:

Nifty Bank BANKNIFTY on November 13, 2024
Nifty Midcap Select MIDCPNIFTY on November 18, 2024
Nifty Financial Services FINNIFTY on November 19, 2024

No new weekly index option contracts will be generated with an expiry date beyond the last expiry date for the respective index as mentioned above.

NSE will continue to make weekly index options available only on the Nifty 50 Index (NIFTY).

Here is the NSE circular.

Nifty expiry will be Thursdays
Sensex expiry will be on Fridays.

Here is the Index options expiry schedule after November 20, 2024:

{ 0 comments }

Open FREE Share Trading Demat Account