Is there any difference between trading options of Nifty and Bank Nifty?

F&O
1

For the few sessions that I have been watching and practicing, it was Nifty. I have never looked at Bank Nifty. But as you all know because you do, there is a lot of content on options on YouTube wherein they take examples of BN alone, so I would like to look at BN too.

But I don’t if Nifty and BN are the same, or there are some differences which one should know before taking a trade.

Another reason I want to look at BN is because of the obvious lot size :grin:

@AlgoEye @jashjacob @Jason_Castelino @VijayNair @t7support and all others.

:question: :question: :question:

2

Nifty is an index with banks and many other companies from different sectors. Bank Nifty is an index with banks alone. Nifty and Bank Nifty are 20% correlated because of common presence of banks.

Bank Nifty has higher beta or generally more volatile than Nifty.

What advantage do you intend to gain from this ? BN index is nearly twice that of Nifty. Hence the lot size is half that of Nifty.

3

Yes, I know that.

I did not think this way.

As the lot size is small, if I were to buy options of small premium, I need not pay more because of the small lot.

4

Typically BN option premium is more than Nifty. So you won’t get this benefit.

5

I am referring to the single digit premiums :grin:

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6

BN is more volatile than nifty so its high risk high reward type instument than Nifty. From my experience, just start with Nifty for a year before jumping to BN .

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7

If you are x% away from the spot, BN options have more premium than Nifty.

8

BN offers more opportunities for traders, but it is also more difficult to predict.
Requires more margin per lot for Option Sellers, offers more premium, and can be more profitable (it is for me).
Also feels like it is more susceptible to manipulation by a group of Big players - due to the way this index is constructed.

Its a flawed argument for the reasons @t7support mentioned.

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9

What flawed?

There are 5 rupees premium options available for both Nifty and BN, and if I were to take them, I would be paying less for BN due to lot size. That is my point, nothing more.

Nifty 18400 CE at 5 and BN 44600 CE at 4.80.

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10

It appears so, or do you feel it happening?

How is this possible, I know about operator driven stocks, but not an index :face_with_spiral_eyes:

11

Its flawed because it is not an apple-apple comparison.

I just think it can because moving 1-2 stocks can move the BN index significantly.

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12

I am just talking about a buyer who has very very limited capital, and wants to buy an option in Nifty or BN, just from the perspective of money, nothing else.

13

But no one can move the heavyweights HDFC or SBI, or are you talking about IDFCB, Federal, AU?

14

Got that.
But if that is all you are concerned about, then you can also buy cheaper 2.5 Rs option in Nifty :sweat_smile: You can do what you want but “lot size” is not an “advantage”.

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15

To experience, just to experience as much as possible with pennies, that is all :face_with_spiral_eyes:

Not that I don’t know more money is made in ITM, I got this point :grin:

It is just like watching a movie, with someone paying 300 and someone paying 30, and they get to watch the same thing :movie_camera:

16

Again flawed :upside_down_face:
When you pay money are you concerned more about the ‘absolute value of money’ or the ‘denomination’ you pay?

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17

I just want to watch the movie, I don’t like to spend 300, and I don’t mind sitting below, so if I get to watch the movie for 30 rupees, I will take that. Perhaps you don’t.

18

And to extend the analogy, I would rather buy single digit far OTM on friday, just to gain experience, and don’t mind buying Dmart at 4000.

19

That is not what I stated.
Say you are paying 100.
Does it make a difference if you pay
50x2 or
100x1

You should only worry about the absolute value of money (which is 100)

1 Like
20

I will buy 1 lot if I get a chance of buying 1 lot, that is my limited point. 50x1.