Please go through this link
Is it possible in India also since many people are joining to invest/trade and opened account during this pandemic period.
In our india 20years old are busy with studies college (assignment) etc
Others who are jobless waste time on Tiktok ,Pubg game etc
I was one lucky to (discover) and get in this business at very young age 
I always stay caution before trading and investing, I always have stoploss in my trades !
I learn everyday something new of stock market !
( Stock market) is risky (Futures and options) are more risky
(warren buffet) describe derivatives as āfinancial instruments of mass destructionā.
Only money if we afford to loose should be used for trading derivatives strictly.
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Even if we buy Options call or put is there any chances of loosing more money than the premium paid.
Please clarify this.
Call/Put Options buyer loose money extent to premium paid, Options buyers have limited risk and unlimited profit
There are no chances of losing more money then the premium paid.
The young trader who commit suicide because of negative cash balance was novice options trader he didnt know much about options started gambling in options
He took a trade in bull put spread stategy
In america options are CA (call american)
That means buyer have right to exercise the stock anytime before expiry
Put seller should take delivery of stocks if buyer exercise the options,
Kearns may not have realized that his negative cash balance displaying on his Robinhood home screen was only temporary and would be corrected once the underlying stock was credited to his account.
In india also ; traders have right to exercise anytime before expiry !
Then what is the difference ?
No, not before expiry! In India itās European.
In the USA ; In excercising the option ; the trader can exit / squreoff the position/trade anytime before the expiry!
In india ; also ; the trader can exit / squreoff the position/trade anytime before the expiry!
So what/where is the difference ?
Am i missing somethingā¦ ?
I opened trading account when Iām 19š
Exiting means squareoff.
Exercise means taking/giving delivery of stocks
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If I understand correctly the whole point of option is to hedge and protect buyerās and sellerās interest. If I am willin to give 20 rs premium on a stock with a strike price of 200 then it is because I am positive that it will be costly in the future ( like 250-270) and by going through the option mode I will be able to get it at 220 (200+20)
Now, I will exercise this option only if price of the stock i higher than 220. If for any reason, it fell then I will let my premium lose.
It is just that we have started playing with options as if they are some kind of stocks. We buy call at 100 and when it shoots to 140 ( sometimes within an hour) we sell it, and make 40 percent return.
But this is not āExcercising an optionā in true sense.
Excercising an option is buying the stocks at the agreed strike price ( if prices are in your favour).
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If i buy the call option at 20 and if the stock price bulls from 200 to 270 ;;; my call option premium also rises from 20 to 80 .
If this is scenario then i will sell/squareoff the call option position and book the profit .
Why i would buy the stocks paying 100% margin ???
Pls correct me if i m wrong ā¦
So , as per my understanding; in excercising;
(1) only possible in stocks options and not in index options !
(2) only call option and put option buyers have right and can exercise. SELLERS do NOT have this privilege
(3) if the call option buyer is excercising; he has to be ready with 100% margin because he is buying the stocks / converting the option call lot into cash equity !
(4) in excercising; sellers do not have any rights
(5) but ; what if the seller deny to give delivery or the seller donot have the stocks in hand to give the delivery to the buyer
(6) if out of 100 buyers ; 20 buyers want to excercise ; how do they select the sellers ? With whom they excercise ? Are they selected randomly by the exchange?
Yes to 1 to 4
It will go to auction and you will get your stocks but with 1 day delay
Exercising means not squaring off at expiry.if you are an option seller there will be a buyer matched to you.
Thatās how open interest works.
There will be equal number of buyers and sellers at any given time in the market
Suppose i am put option buyer today .
Tomorrow i want to excercise .
What should i do then?
Will the exchange assign me a random put call seller randomly ?
@Suneel1
@Learner_cash
I am talking about usa optionsā¦
When you square-off your position, your obligation is passed on to the person who is buying from you.
I guess for the last point, it is randomly assigned by the exchange for the sellers. Assuming 100 buyers and 100 sellers, 20 buyers want to exercise the option, so the exchange will randomly assign 20 sellers to settle their obligation.
CA or CE/PA or PE
No random selection
The person who sold option to you will take delivery of your stocks if you bought puts