Hi,
I am a new/Noob Trader.
I have a confusion and need someones advise who does Options.
I bought Nifty 50 in option trading. it was basically Nifty 03 March 14750 Put. i bought this on 25th February 2022. Nifty was 17128. I did a put option which was like nifty cannot reach 14750. i bought around 20 Lots at 5 but it eventually kept on loosing Value. Can someone explain what really happened with me. I mean Nifty went down in the week but i am really confused what i bought. Would love your opinions and help.
Hi,
As you have bought 14750 Put option for â‚ą5, Nifty50 should be below 14745 (strike 14750 - premium 5) on the expiry day. Only then you will make profit. In all other cases, i.e., Nifty at or above 14745, your option will expire worthless (even if it moves in your direction). Hence the loss of your premium.
Note: I am a newbie too and I hope I have cleared your doubt. If I am incorrect/incomplete, I hope that we’ll get answers by experts.
You bought deep OTM options that’s why you lost money. If you have sold that option you surely could make 250rs per lot. First clear option basics from Zerodha versity or any other book of your choice and then trade.
Here my question is which broker are you using that allows you to buy more than 2300 points away from spot? My broker doesn’t let me buy 1000 points away for margin benefit.
Yes but if I want to execute the buy order first it doesn’t allow me to do so. And the guy above mentioned he only bought deep OTM options that too 2300 points away.
Okay, I’ll be honest. I saw plenty of buy orders on this option and i had no clue that it Nifty has to go below 14750 for my option. My General View was that this option of put is impossible to cross so i put this.
Thank you for the clear example of Lottery System and i will read Varsity to Understand options.
Lost all the money, i did not understand. on the expiry day it will trading at 0.20 and i put a sell order for this but that did not go through, it was like you need at least 5200000 margin or something. i mean i really do not know why sell order did not go through.
They’re buying it for various reasons, for margin benefit, hedging etc. Please go through the entire varsity section on options to get a good idea on what options are.
I did Trading on Paytm Money. i do not understand how i would have made 250 per lot. i lost every penny in it. on the expiry day it was trading at 0.20 to 0.30 and i tried selling the lots but it did not go through.
It needed massive margin or balance to sell the lot. i will surely learn from Varsity but like i am literally clueless like why there were massive Buy orders on this option when people knew its going to zero. Would love to understand that.
Thats a huge mistake you were doing…
you were trying to selling the option to receive 0.20 premium… thank god the order didnt go through for whatever reason…
I would honestly suggest you to disable FnO and learn the basics first… then start with actual trading.
Basically i kept on adding lots as the Value kept on decreasing over the days. when it went to 3 rupees i added more lots and eventually invested almost 20K which obviously i have lost. i will not do options until i learn them. i had 4800 units meaning 96 lots.
i was really scared at the minute but would like really understand how wrong i was doing? If you could explain, it would be of great help. i really want to learn from this mistake.
Thank you for the advise. I don’t really do options. it was my first ever trade. what really happened was that when i bought this at 5 on Friday it went to 7 rupees on monday and i was making profits and eventually got greedy. so i kept on adding more and lost all of it.
Why was there 52 lac margin to sell. like how do people sell options? i did not get it.
Thank you for your knowledge, i will surely see the videos and read varsity.