For option traders, India VIX is a very important factor that helps to make a decision. It’s a Volatility Index based on the index option prices of NIFTY F&O segment only not any other index like BSE or MCX.

India VIX is a volatility index based on the index option prices of NIFTY. India VIX is computed using the best bid and ask quotes (the difference between quotation of sellers and buyers of options at different strikes) of the out-of-the-money of near and mid-month NIFTY option contracts which are traded on the F&O segment of NSE. India VIX indicates the investor’s perception of the market’s volatility in the near term. The index depicts the expected market volatility over the next 30 calendar days. i.e. higher the India VIX values, higher the expected volatility and vice-versa. read more

Well, it’s important to study what went wrong with every trade you take. And also what went correct with every trade irrespective of the trade made profit or loss. This will give you an idea of what must be done and what must not be done in the next trade. That way with time you become a better trader.

However if you see closely at least 10% of the trades you take must be ignored. Why? Because they were pure speculative trades. Speculative trades are trades that you took just like that because “you thought so”. read more

There are a lot of reasons why you should not take tips from your broker.

Recently I emailed my subscribers asking them the problems they faced while trading. At least 5 people said they were taking tips from their brokers.

When I asked them why the brokers – their reply was that since they know the stock markets better and that they have the ability to move markets.

Here is the the copy of email received:

Dear Sir,

The problems while trading faced by me are:

1) I am a beginner and my broker is not able to provide proper advice, hence losing money. read more

Today morning I got a call from someone who bought Reliance (RIL) Call option a few days back because one of the WhatsApp group he was gave a buy call on Reliance. He bought options worth 37k, and when he called me he was in loss of 20k.

I asked him a few questions which I think you should also ask yourself when you make a trade:

1. What is the logic behind this trade or Why are you taking this trade?

Ans – The answer here is because the WhatsApp admin whom he does not know gave a call to buy RIL. It’s like blind following. Is he Warren Budget that you believed him? read more

For beginners rule based trading is better for risk management. Experienced traders may change the rules depending on their experience and situation as per the market condition. But it’s better for all to stock to the rules.

In this post you will learn how you should trade options with rules. These rules will keep you safe.

1. Position Size Should be Small:

It has been told quite often and written many times in financial blogs that when you trade derivatives keep the position size small, but for some strange reason after a few profitable trades, traders start trading with 5-10 lots thinking they will make a lot of money in no time. read more

Post Date: 26-Sep-2019

One decision to lower corporate tax by Finance Minister Nirmala Sitharaman by a few percentage resulted in huge jump in stock markets.

The News: On Friday, September 20, 2019, Finance Minister Nirmala Sitharaman announced a reduction in the country’s effective corporate tax rate from around 35% to 25%. For companies that do not avail of any other incentive or commission, the effective tax rate would be just 22%.

This will save a lot of money of the companies doing business in India and of course will result in better profits, which in turn will result in business expansion and creation of jobs. Its a very good news for Indian economy. read more

Since 4-Jul-19 both BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) are falling.

Two main reasons are:

1. Business sectors such as Automobiles (Maruti Suzuki, Tata Motors), Banking (PNB, Yes Bank), Non-Banking Financial Companies (NBFC) (Indiabulls Housing Finance Ltd), and even FMCG (Parle) are seeing a heavy slowdown in business. More than 1 lakh people have lost their jobs in these sectors in just the last two months and more will lose in the coming days.

2. FPIs and FIIs are selling, in fact, the rich investors in India also not happy. read more

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