Hi as I’m new in Zerodha nd never trade in option yet. Today i was confused to HDFC Bnk pe at 1₹ but i dont know lot size, for intraday n positional whre to i ve keep my trade on CO, BO OR CNC. MAY TRADE Ioption in CNC ? Suppose i bought in CNC one lot HDFC BANK ND MY PREMIUM IS 1000 BUT AFTER FEW MINUTES I SEE THAT MY PREMIUM WENT UP 5000 SO HOW TO BOOK PROFIT OR I VE TO SELL OPTION ONE LOT OF HDFCBANK INSTEAD OF BUYING. GUIDE ME I’M NEW
You can take an F&O trade either in NRML or MIS. NRML stands for Normal and MIS stands for Margin Intraday Squareoff.
To take an overnight F&O position, you will have to use the product type as NRML. Complete Span and Exposure margin will be required to take a Normal position. This position can be carried forward till expiry and it will remain open as long as the Span margin is available in the account.
To take an intraday F&O position, you will have to use the product type as MIS. You will receive a 2.5x margin for a MIS F&O trade. What this means is only 40% of the NRML margin is required for a MIS trade. If you require 1 lac for a Future overnight position, an MIS position in the same future will cost you 40k. All open MIS positions will be squared off at 3.20pm by our Admin terminal. If there is sufficient margin in the account, you can also convert an F&O trade from MIS to NRML before 3.20pm.
When you are trading options, you make money on the premium. The lot size of options is the same as that of the future of the same underlying. If you buy an option of lot size 500 at a premium of Rs.100 and now the premium has moved up to Rs.110, then you are at an unrealized profit of Rs.5000. If you square off your position at this price, then your profit of Rs.5000 will be realized.
If you are new to options trading, it is a must that you read up everything under Options Theory on Varsity. There is also a detailed module on Option Strategies on Varsity which you should get to only after you are completely aware of the theory first.