Stock call Option Carry Forward and Exit Square off Doubt

[ShubhS9]

@Trader_ninja

I have a query, if I book a BANKNIFTY 15th October (weekly) expiry contract with NRML (Normal attribute) today, the trade is carried forwarded until expiry (This Thursday for BANKNIFTY) right, sir?

Right.

@Trader_ninja

But, assuming I book a NIFTY Call Option and Put Option with the same strike price, and relatively liquid contracts, if NIFTY moves up-- we gain from the Call Option but lose from the Put Option and vice versa.

Query–3

If it’s so, then this strategy yields less returns and one has to put in an extra trade for hedging purpose (either Call or Put), but how come this strategy turns out to be successful for at least a few traders?

This strategy is called Straddle, you can learn more about it on Varsity.

The Long Straddle – Varsity by Zerodha

@Trader_ninja

Generally the session 9:00-9:10 AM is pre-market session-- this is used to determine price discovery, execute yesterday AMO orders? What if this session didn’t happen and we directly start trading at 9:15 AM.?

Pre-market session was introduced to reduce volatility at market opening, even now there is volatility at market opening, it would be even more if not for pre-market session.

@Trader_ninja

Can you elaborate sir?

Not much idea about what to look for when choosing Strikes, maybe you can read more about Options on Varsity, which will give you more insights.

Options Theory for Professional Trading - Varsity by Zerodha

[Trader_ninja]

Yes sir, I read about Straddle, but how to turn it into a successful strategy.

Thanks sir.

[KANDI]

Dear Sir
At 10 am ,I have sold of ABC share’s 105 CE.At 11 am,I closed that position first and then open fresh
contract SELL 110 CE. Again I close 110CE and then freshly enter SELL 115CE.ALL INTRA DAY .Can the initial
Margin for SELL 105 which will be released can be used subsequetly for Sell CE110 and so on???

[ShubhS9]

@KANDI

Can the initial
Margin for SELL 105 which will be released can be used subsequetly for Sell CE110 and so on???

Yes, the SPAN + Exposure margin which will be released after you exit your position can be used immediately to take another trade.

[KANDI]

Thanks for your quickest response

[curiousvi]

Just want to make sure …that released span+exposure margin can be used immediately to buy stocks correct?
I understand that released margin can be used to take another trades in FNO segment but want to make sure about equity cash segment. @ShubhS9

[ShubhS9]

@curiousvi

Just want to make sure …that released span+exposure margin can be used immediately to buy stocks correct?

Yes, you can use the margins released for buying stocks. Though, for buying stocks you’ll need cash, if it is collateral margin, it cannot be used.

[curiousvi]

Ok thanks but how do I know if that margin released is not a collateral margin ? I think system will not allow me to buy stocks if I don’t have cash left and only collateral margin left correct? Also please confirm that collateral margin received against pledged shares has no entry in ledger statement in console correct?

[ShubhS9]

@curiousvi

Ok thanks but how do I know if that margin released is not a collateral margin ?

On funds dashboard, the Available Cash column will reflect the amount of cash you have and the Total Collateral, reflects the collateral margin.

@curiousvi

I think system will not allow me to buy stocks if I don’t have cash left and only collateral margin left correct?

Right, you won’t be able to buy stocks if you don’t have any cash in your account.

@curiousvi

Also please confirm that collateral margin received against pledged shares has no entry in ledger statement in console correct?

Right, margin you receive from pledging doesn’t show up on the ledger.