Options Trading

[Satyen]

With any option calculator and NSE Bhav Copy, you can calculate IV for different options. Further, both ODIN & PIB provide Option Calculators.

I will suggest purchasing this cheap Option Caluculator & Simulator.
http://www.kaininito.com/options/index.html

Usually, Volatility of actively traded option is 25-35% and that is my guidance level for judging comparative IV of options.

Regards,
--Ashish

Thank you asish

Regards
Satya

 

[santoshdts]

Brokerage for OPtions,

Hi..

I am Having an Ac with Sharekhan. I bought an NIFTY CE FEB 28 QTY1000 @ 4.95
Ive Been CHarged Rs.2000 as Brokerage and Rs.240 as Service Tax

I want some clarification on the brokerage and other charges Levied. Now If I sell the option I will be again charged with STT @ 0.025.on the Net Rate, Suppose I seel the Option @ 15 ( 6000+15=6015) 6015*1000=6015000*0.025%. Am I Right, Plese correct Me If Iam Wrong.

I wanna know weather the Brokerage calculated is High or Correct.

ThanX and Regards,

Santosh

 

[aca_trader]

Thank you Asish

means if i write option , i have to settle M2M profit/loss on same day?..as like in futures

My Pleasure Sanju!

Yes! M2M is to be settled in similar manner and once options are Deep ITM, the delta will be close to 1.

further qurey
what is stamp paper duty and taxes for option trading ?...does they vary with different broker or they are std?
till date i can't understand how taxes/service chaerge etc calculated by kotak securities(in which i trade)..if u know plzz share

thanks
...sanju!!

I am not well-versed on this issue. However, there is quite a long discussion on the forum regarding brokerage on options. You can search and go through it.

Regards,
--Ashish

 

[aca_trader]

Useful. Thanks.

Regards,
Kalyan.

My Pleasure!

Regards,
--Ashish

 

[aca_trader]

Thank you asish

Regards
Satya

You are always welcome!

Regards,
--Ashish

 

[ajaygodha]

Ashish,

As far as my knowledge goes there is no MTM settlement when one writes option.

Ajay

 

[aca_trader]

Hello Sir

A kind request ... Can you please guide new traders like me to get into
options trading. I'm still confused on whether to buy 'OTM' or 'ITM'.

In the past I've lost some money as the market did not rise according to my
expectation.

Thanks in advance.

Hi Angel!

First of all, there is no Sir over here. We are all friends and I myself is a new trader.

Coming to Option Buying, there are several major considerations. Options are not linear products and hence the risk and reward is also non-linear.
First of all, we have to define our risk-level. Greeks play a very important role. Before delving into any option trading, it's advisable to gain an understanding of them especially if one is willing to carry overnight positions.

Buying Deep OTM options is more risky and can be hugely profitable. If the market moves sharply in your favour, you can reap huge rewards and multiply your money several time. It's usually advertised that small traders can use options to enhance their returns as they may not be having significant capital to make sufficient money using other instruments. However, my understanding of options suggest that it's not the case if you limit your risk per trade as a percentage of capital to the same level as you will limit with cash or future contracts. Only when we use huge leverage, we make huge gains with options. No harm in doing it if you are devoting only a small portion of your portfolio in it. However, if you employ huge money on it, one single trade which does not go in your favour may dent your portfolio severly.

Hence, if you want to engage in option buying in India where usually options are very illiquid, I will suggest devoting major part of your portfolio to ATM or slight OTM options as usually these options are most liquid and usually have a delta of +/- 0.5. A small part of the portfolio you can keep aside to buy OTM calls whenever there is an excessive selling or buying in market and market is near to a strong support/resistence. However, At those times, volatility will be very high and even if price does not move against you and volatility drops, the option prices will go down
and you may experience losses.

A very good alternative to buying outright options is to buy a bull/bear spread as they limit your losses and you can allow trade to take its own time without worrying about unexpected losses.

I hope the message is clear. In case of any doubt, please post them and I will try to solve them.

Best Regards,
--Ashish

 

[aca_trader]

Ashish,

As far as my knowledge goes there is no MTM settlement when one writes option.

Ajay

Ajay,

It's there if the position is not perfectly hedged.

Regards,
--Ashish

 

[rajsingh]

Aca 's right . There is MTM for ITM options, a la futures.

 

[rajsingh]

Question for Aca.

Do we have any option friendly brokers in India at all?

For eg. If we write straddles/strangles we are asked to put up 2 margins. Why/

Only one can end up ITM.

Help