How to Exit Option Trading

If we brought lot in option trading. we need to wait for exercise till expiry or if we exit when premium gains?

Please suggest me

We need to hold till expiry

OR

We can exit when premium Gains

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Exit can be exercised at any point of time. No need to wait till expiry.

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If you wait till expiry there will be theta decay on bought options.
So if you see premium gain and if you think its enough you should exit but if you think by waiting it will continue to make more profit (even after theta decay) you can wait.

It all depends on your greed vs contentment.

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theta decay ?

Looks like you are new to trading. You must definitely read Varsity.

Sir for one simple question how can read . please suggest what is theta decay . defiantly read thank you

Please click on that hyperlink. You will be able to find the answer.

Thank sir…

Alex Sir. i have also a question. If we pay 12000 premium , if market not movie our side that means not move towards strike price. what will be the our loss. premium paid or Stoploss?

In case STOP LOSS losses more than premium what will happens?

I really wished i could have made u understand the whole process in one go. However, to be detailed and specific to ur querry, i feel this is not the correct forum . Whatever, …

Understand the todays chart of NIFTY wrt its 9300 call and 9200 PE and its corresponding price movement. If let u had bought 9300 CE @ 100 in the morning, means 100*75 (Lot Size) = 7500 only u will loose at the max if the direction is against you. means the 100 u paid will start decaying with every passing moment coz first time is lapsing and second, u r going away from strike. IIf u have put SL @ 75 means u will loose max 25 (100-75) x75 = 1875 and remaining 7500 - 1875 = 5625 will be ur capital remaining. And if it is towards ur direction, u will gain till direction is maintained and can exit any time if u feel to exit. If 100 becomes 101 or 150 or 200 or whatever u feel to exit. Prepared a chart for u in colored denoting corresponding price movement. Hope will make somewhat clearer.

SL can never be more than ur premium on buy side. But i strongly say plzzzzzzzzzz, dont do options or futures ever till u gain an experience of knowledge. Refer Versity for details.

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Look like your confuse between stoploss and option premium let me explain

A stop-loss order is a buy/sell order placed to limit the losses when you fear that the prices may move against your trade. For instance, if you have bought a option premium at Rs 100 and you want to limit the loss at 95, you can place an order in the system to sell the option premium as soon as the option premium comes to 95. Such an order is called ‘Stop Loss’, as you are placing it to stop a loss more than what you are ready to risk

In option premium if you have brought 12000 worth of premium
You dont loose entire premium unless you are in expiry day or black swan event day

In normal days you loose some portion of premium if market moves against your direction or say market is in sideways not really going up nor going down then it is consider sideways market in sideways market you loose some amount of premium because of theta decay
Overall in normal days you don’t loose your entire premium in expiry day or black swan day you loose your entire premium (if market move against your direction)

In options many mathematical rules applies
Like Theta, vega , gamma, delta etc in premium

I hope this helps
If you need any further help hit me up :slight_smile:

Thank for all experts giving time to reply my qyery