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In short: Selling of options on paper is unlimited risk so brokers block a huge margin as regulated by market makers. 100% margin is given against Nifty BeES holding to trade derivatives. Read to know more in details.

I get too many questions on selling of options. Some traders are sacred selling options and some do not sell options because they think a lot of margin is blocked.

If a lot of margin is blocked then there is a reason. Selling of options on paper is unlimited risk. So brokers have no other option but to block a huge margin as regulated by market makers. read more

There are a lot of traders who want to trade intraday or in other word indulge in day trading involving options.
There is nothing wrong with this except the problem is they want to do this while having a day job.

Do you know I was caught red-handed doing day trading in my office and was sacked immediately the day I was caught in the office doing day trading.

So if you want to day trade its fine but make sure you are doing it in your mobile and safely from the eyes of your boss – else the results can be bad. read more

What To Trade In General Elections 2019

I have been receiving emails from my free as well as paid members on What To Trade In General Elections in India to be held in April-May 2019?

Before reading this article I suggest you also read impact on Nifty and Bank Nifty on India VIX due to General Elections 2019.

Since this two months are going to be very volatile – I would suggest going for the debit spread strategy.

A debit spread is a strategy where a trader buys an option near to the money and sell an option slightly Out of the Money (OTM). read more

Date of Post: 04-Apr-2019

The general election will start from 11th April and end on 19th May 2019. The result day is 23rd May 2019.

This will happen to India VIX – a major factor that decides option premiums.

Here you can see India VIX here:

India VIX as on 04-Apr-2019, 2.07 pm:

From 11th April 2019 it will start rising and will be in range of 16-18 to 20-22 until 19th May 2019. Then from 20 to 23rd May 2019 it will keep rising and may cross 22-25. After 23rd May 2019 it will start to drop. read more

Option traders must be very smart before they put their money on risk trading options.
In this post I will discuss some things what an option trader must look at before trading.

No 1 question should be – “Does This Fit My Portfolio?”

Before trading you must know your max risk in the trade. If your max risk is more than what you can afford its better to avoid trading. Do not trade against your portfolio size.

No 2 is – “What Plan I Have If My Trade Goes Wrong?”

Do not hesitate to take a stop loss if the position goes against you. However on the contrary traders seems to average out a bad position. read more

How To Improve Consistency In Your Trading

How To Improve Consistency In Your Trading

If you are failing to consistently book profits then there is something wrong in your trading style. Consistent return is very important in stock trading. The problem is change in plan of trading every time they trade. And this is one of the main reasons why most fail.

Misconception of Trading

Traders think consistent profits means making money every day and winning every trade. This is a huge misconception. Consistent profits means successful in at least 70-80% of the trades and losses if any are limited.
This ensures they make profit in one financial year. read more

Date of post: 25-Feb-2019

Some reasons why there is too much volatility in the markets:

  • Indo-Pak Tension – This could have tanked Nifty but luckily it did not break 10600, but created confusion in traders mind. It did go down but not too much.
  • Tussle Between Government and RBI. This problem is going on since very long and I do not think this will get over soon.
  • General Elections in Apr-May 2019 – This is a major source of volatility and will keep moving the markets till the elections are not over.

My advice is trade with the basics of trading – do not let the stop loss be violated. This means if you have decided to keep stop loss on certain point – it’s better to exit the trade at that point. And when it comes for time to book profit – just do that. Do not wait for more.

If you want to play safe my courses will help you. Please note that option selling is required so you must have at least 75,000 in your account to do my strategies. read more

Disclaimer: Although most of the time writing or shorting puts often produces better results than buying calls or holding a stock it comes with its own inherent risk. Please know the risk involved before shorting a put. I am not responsible directly or indirectly for any ideas or strategies written in this post or this website.

Selling options whether it is call or put is considered very risky proposition especially by new and novice traders. One reason is everywhere it is written in option trading books as well as in many online websites that selling options is an unlimited risk. This is true on paper but is there any rule that says if you sell and option you cannot close it before expiry? read more

Here is the new change in future and option selling margin from 21-January-2019:

Change in F&O margins from January 21, 2019

Here are the official circulars:

SEBI: https://www.sebi.gov.in/legal/circulars/dec-2018/review-of-risk-management-framework-for-equity-derivatives-segment_41314.html

NSE: https://www.nseindia.com/content/circulars/CMPT39766.pdf

There will not be any change in margin for option buyers. However if you are future trader or option seller – this might effect you. Mainly profits will reduce in terms of percentage on the margin blocked if you trade future or sell options. read more

2019 Indian General Elections are due to be held in India between April and May 2019 to constitute the 17th Lok Sabha. Its obvious that a lot of speculative trading will happen from now until the results are declared. In fact for one month after the results are declared there will be volatility.

See this movement of Nifty last six months from October 2018 to February 2019:

Nifty Oct to Feb 2019

Nearly 1500 points drop from Sep to Nov 18 and then 1000 points surge in next 2 months. This is volatility. A 500 points up and down in a few months is considered stable stock markets – but 1500 move points is above average volatility. Be prepared for this for next few months. read more