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How Does INDIA VIX Help in Trading Options

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Today (Monday – 15-Apr-24) is the day when INDIA VIX and Nifty behaved exactly as they are meant to be. INDIA VIX and Nifty are inversely proportional.

See the screenshot below. The time and source of the screenshot are inside the pic itself:

INDIA VIX Mon, 15-Apr-24

Nifty 50 Mon, 15-Apr-24

I have written about this earlier also. You can read them here:

India VIX Has Started To Rise As Elections Are Approaching

India VIX at a Very Comfortable Level What it Means

How To Trade Intraday With Help From India VIX

India VIX is A Very Important Indicator of Overall Market Direction

What Kinds of Strategies to Apply as Per India VIX

India VIX Increasing by 22% in a Single day is Not Good

If India VIX is Low Options Premium Will Also be Low

How India VIX Is Calculated and What to Expect After Seeing High or Low India VIX

Impact on Nifty Bank Nifty India VIX due to General Elections 2019

How does INDIA VIX help in trading options?

You can get an idea. If INDIA VIX has risen from the previous day option premiums will likely increase giving a great opportunity to sell.

However, you need to hedge them else on paper you can suffer unlimited loss. But loss is only till you decide to take a stop loss. This means that option selling on paper has an unlimited loss – the real loss is when you take a stop loss or the max-margin blocked to sell option.

With hedging the maximum margin blocked will reduce by 75%. Naked option selling is dangerous. In a black swan event, a naked option seller may lose 100% capital deployed to sell the option.

Therefore you must always hedge options sold and all futures trading. Whether it is a future buy or sell trade – both on paper are unlimited losses. Again if you hedge futures with options the margin to trade futures will reduce by 75%.

You can do my course and learn strategies to hedge both options and futures.




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Open ZERO Brokerage FREE Share Trading Account - Buy and Sell Stocks Without Brokerage - Set GTT (Good Till Triggered) Orders on System and Forget

Traditional brokers charge a lot for brokerage; however, this broker does not charge anything for stock buying and selling. Also, you can set GTT (Good Till Triggered) order after buying a stock, so that the system can sell the stock automatically at your target price even if you are not monitoring the market. Only 25k is blocked for option selling with hedge. Also, you get a lifetime free account in Sensibull (virtual trading app & strategy builder) which charges Rs.800/-+GST a month. It takes 5 minutes to open an account online. Click here and Open Free Account with Them Today >>

About the author: Dilip Shaw I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

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