Nifty 10184
Nifty Oct Fut 10196
Nifty OCT 10200 CE @ 43.20
Nifty OCT 10150 PE @ 30.40
I was tired by reading FLAT,LAND,TRAIN stories all over internet to explain F&O
In simple manner kindly clear my doubt.
What if NIFTY change as per my below prediction
- 10210 , should i go for Buy CE or Buy PE
- 10150 , Should i go for Sell CE or Sell PE
I am confused of same contract with 2 strike price (10200 CE-10200PE) with 4 type(BUY/SELL CE,BUY/SELL PE).
like 10200 is CE as well as 10200 is PE
Now again in 10200 CE, there are two ways, Buy CE or Sell CE
here comes again 10200 PE, two ways, BUY PE, Sell PE.
I am a simple trader, just want to know, As per my calculation, how do i react, should i go for buy CE or Sell CE or Buy PE or Sell PE.
Varsity knowledge is good, but no video i found so that i can see live market BUY/SELL of CE/PE which explain margin, price movement, profit/loss .
@fahadmalik You Joined this Platform on Nov 12, '14. Still you are confused?
Whatever I’ll Explain here Right Now, You will not understand.
Because you are Already so, Confused.
I think you have not read the basics of Options.
( I was also confused when I started Options Learning )
What I am saying right now, Do this Trust Me you will understand Options How works.
Open your watchlist and Add Nifty Index and 10200 CE & 10200 PE in your watchlist.
When Today Market will open You see these both Options How they will behave.
Let’s us know what you observed and Reply here after that We are ready to clear all your Doubt’s.
3 Likes
Yup, never tried Option, mainly trade in Equity, Futures, Currency. Simple, buy and sell strategy.
But to earn decent profit, it’s time to learn option.
Now I want to test my technicals on Options too. But when I started to understand , it’s like I was sinking in depth of knowledge of Option trading 
but no practical knowledge.
Tomorrow(Actually today) I will try to test each CE and PE. Hope It will not blow up my account.
Just observe the price Movement Don’t Buy/Sell.
2 Likes
i was watching OCT NIFTY 10200CE which was on 46, and it also moves to 56 as per my calculation. What should i do. Should i buy CE 46 and sell it after 10 points. Is this the correct way ? Margin required is around 2500 bucks.
Also , if the above case is correct, when i sell CE, margin comes to 18k something.
But PE sell is 3k something. so if my calculation is a bearish, i would choose PE , for bullish i would choose CE ?
Yes, Going good.
Don’t buy/sell it Just Observe for now.
You will get many opportunities Don’t be in hurry.
1 Like
U did not reply his question’s answer. the same confusion i am facing today. plz plz reply with example.
if you are bullish on nifty for the next one month - buy Call and if bearish buy puts.
do not sell naked calls or puts. They are not meant for it. They are not meant for income.
Retail trader should only focus on buying options and not selling them , since you are not a market maker. Market makers sell options and are delta hedged.
Now there are various options strategies for retail traders, but you only need a few like buy call and puts, spreads and ladders.
But trade options only if have good confidence that there will be volatility , otherwise don’t bother.
Options are basically used to hedge against volatility and not direction. only Experienced retail traders should trade them.
To trade options over futures or outright stock, you must have a fundamental view and some catalyst that will move the market in the next one month(i.e volatility). Only then do you bother with options,otherwise you are just wasting capital. Better stick with futures or buy stock with cash.
Actually he gave very good way of learning options
When i entered into options last month, i read Varsity, then examples, then checked Nifty option chain also trying to analyse or find things
Then i added one CE and PE in Market watchlist and saw for 15-20 minutes. That made things more clear than anything else
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If Nifty is 10500 right now, and u feel it will go up, Buy 10500 CE (CALL OPTION) (Actually u can buy call of any strike 10500, 10600, 10700 that depends which one u feel will move more higher, that u need to analyse with experience u will get to know)
If Nifty is 10500 right now, and u feel it will go down, Buy 10500 PE (PUT OPTION) (or any other strike)
As trader_dude told, dont try to sell options becoz selling options has unlimited loss potential, buying options has limited loss. So newbies like us can do limited risk trading.
Example, lets say Nifty is now 10500, and u feel it will go up. You can Buy 10500 CE
Lets say current premium is 10 rs. So you have to pay minimum of 75 (1 lot) * 10 = 750 rs.
You can trade more lots also as per your choice.
Now if Nifty moves upwards, this premium increases lets say it goes to 12 rs. Now your investment becomes 75*12 = 900 rs. You have choice either to wait until FNO expiry (Last thursday of month) or book anytime u want. Usually its better to book profit as u get a decent one.
PROS OF BUYING OPTION - Your loss here is limited to 750 rupees. Becoz option premium cannot go below zero. So once you take a trade you know max u can lose 750, so u will be relaxed
CONS OF BUYING OPTION - If Nifty doesnt move in ur direction or sometimes if it moves slowly, then premium decreases (decays). This is reason usually Option sellers make more money because by default option prices are always going down (Time decay) unless Nifty moves in favorable direction in a favorable fast manner.
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Another thing u can do if u feel Nifty will go up is - SELL 10500 PE
What it means is u r taking other side of the transaction of somebody in the market who is buying 10500 PE. That person thinks Nifty will go down. But u think it will go up so u Sell the Put option.
Problem here is lets say premium is 10 rs.
You sell 75*10 rs.
Now premium goes to 100? You need to buy back at 75x100. Lets say premium goes to 1000. You need to buy back at 75x1000. So u see there is UNLIMITED LOSS. For this reason when u usually Sell options, Broker will take a margin in beginning which they dont take for Buying options
In short, leave option selling to experts. Try option buying by risking an amount which u can afford to lose and play in the market.
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here comes again 10200 PE, two ways, BUY PE, Sell PE.
but no practical knowledge.