Chart Reading in Option

How do we read chart in option trading. Spot price chart OR Premium price chart?

As option premium derives there value through the underlying spot
You should look at underlying spot chart
And not premium price chart !

Mehdi Abbas thanking you…
But Abbas sir most of the time that will be difference so i asked.

Some Time Premium Price Variation in Option Trading. like below

On 08-May-2020 Just Dial Price was 340. Same time Premium was 7.7 for Just Dial May 400 CE . When i check today Stock has reached 349.85 But premium is 5.95. How it is possible?

Time decay brother and if Just Dial prices close below 400 on expiry day that is 28th May this call will become a big zero. Unless there’s good price moves on the upside like 5-6% daily the May 400 CE is going to loose it’s premium prices gradually to reach sub 1 Rs levels and finally Zero.

Please don’t trade stock options before you understand everything related to options. Read the option modules in Zerodha varsity for getting more info on these things. https://zerodha.com/varsity/module/option-theory/

Gautham Bro defiantly will read you given link and thank for your answer.

Brother if Just dial reach 400 before expiry day and on expiry day if it close below 400 . shall i loss premium paid?

If Justdial has good price move like you said above 5-6% only possible earn premium point right?

Bro which one is low risk good return Option Trading or Equity Trading?

Finally bro, Which one is easy to option trading intraday wise or have to wait till expiry?

Brother. If Stock is trading low till 2 before expiry then it suddenly it rise towards strike price. In this case also we can not earn premium right bro?

I think stock moving speed important for premium earns.

If i through about stock will reach the strike price defiantly , in this case How to trade in option?

I think, There are two kind of option trading

  1. Trade on premium earning

  2. wait till expiry (if stock will earns strike price + Premium points after can make money(that is also in one day)

If i do like above same day i have exit or may i hold till what ever i want?

Yes, if you hold on to it and not sell when it rises.

No. What I meant was that if Just dial rises by this much then the option price of the said strike will rise. This is the reason I said to read those modules.

First of all don’t trade, a few weeks see the charts and if possible buy any technical analysis book and read it, you will understand a lot of things, if you can’t do this read all the things in Zerodha varsity, its a good start.

And yes before moving on to anything start with equity trades. If in the next few months you are consistently profitable you could move on to other segments like options, futures or commodities.

Also there’s risk in everything if you don’t understand the basics. So first of all start with capital which you are comfortable to loose, don’t trade with more money. Can paper trade or just watch the chart and read for a few things before you understand how everything works.

Intraday or positional trades, both could be done in options, you don’t have to wait till expiry. But as I said don’t get into options unless you understand everything. First start with Equity.

Goutham bro still i did not read on your reply i just got notification really thank for you reply in this time. thank you really bro … . will read your reply now Good Night…

The market and prices don’t care what anyone thinks. Also you are asking about how to ride a car when you haven’t learnt to ride a bicycle. Please read those modules and for a few weeks just look at the prices and charts in whatever and however you want to trade, most of your doubts would be clarified.

Please take everything slow, else you would just lose money. There’s a learning phase, have patience, read, watch the charts, you would start learning few things at a time automatically.

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