Enquiry about Strike Prices

#1
Res. All Senior Sirs in this Community ,

Could u plz tell me that how there is a strike prices in option are greater or less than Spot prices ? I mean if nifty is trading at 3650 then how there are put options of 3700 , 3800, 3900 ? similraly at same i.e. nifty 3650 how there are call options of 3500 , 3400, 3300 ? Why traders trade in these levels ? PLz guide me as i m new in Derivatives .
 
#2
Res. All Senior Sirs in this Community ,

Could u plz tell me that how there is a strike prices in option are greater or less than Spot prices ? I mean if nifty is trading at 3650 then how there are put options of 3700 , 3800, 3900 ? similraly at same i.e. nifty 3650 how there are call options of 3500 , 3400, 3300 ? Why traders trade in these levels ? PLz guide me as i m new in Derivatives .
well u r new in the derivatives. so before enter into it
i will told you that it is high risk/ high reward type of full time game.
if you wanna enter into it, u should prepare for best as well as worst.
ok
in option let have an example:- nifty current--- 3650
if u think market may go doen to 3500, 3400 or in bad case 3300, then you can buy put of ur assumpition level ( let see u think nifty will go back to 3450-3480 level) then u can buy put option of 3500, as long as nifty go down ur put value will increase.

case 2:- if u think market will go up let see 3800-3850 level, then you should buy nifty call option of strik price 3800, ur nifty call will incerease as nifty up.

REmember:- if nifty remain 3600-3700 then in both case u will loose all ur money, u will be in profit if nifty cross ur strik price. one think also
value of premimum is too much in the starting of the month, & if u wanna play in option then u should buy it in 2nd week of current month and sold it within 10 days. either u r on loosing side
NEVER TRY TO AVRG. IT by buy more contracts if ur contracts loose 15-20 % please try to book loss, if u r on profit do wht u think
never wait 4 last week of expry
normally traders treads in in the call money that z if nifty is 3650 then trader buy call of 3400/ 3500/ 3600 to protact their capital, coz premium loose its value rapidally if it is out of money, where as rate of loosing money in in the money contract is very slow. i think



hope u got my point:):cool:
 
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#4
Posting a noob question here as it is related.

Lets say I buy a nifty call option at a LTP of 50.
In this case will my cost be 50*50(as the lot size is 50) = 2500?

And when I sell it at a loss on a LTP of 20 will my loss be (50*50) -(20*50) = 1500??

Or will it be more??

And in case I let the option expire at the end of month how much will be my loss?

And is there any extra margins required here?

Sorry If I am bothering too much, with so many questions, but i have been advised like above by a related person, and I am still confused. So please advice me.
Thanks a lot in advance.
 

AW10

Well-Known Member
#5
And when I sell it at a loss on a LTP of 20 will my loss be (50*50) -(20*50) = 1500??

Or will it be more??
( Sell price - Buy price ) * Qty === is universal formula for P&L calculation in any type of trading. So yo uare right in your calculation.
As a smart person, also include your brokerage, service tax, stt etc on each leg.. So your actual loss will be more then 1500.
Trading is -ive sum game i.e. even if you sell it back at 50, you are going to make loss due to brokerage.

And in case I let the option expire at the end of month how much will be my loss?
You will loose your complete 50 rs. Why would one prefer to wait till it goes to 0 and not take cut the loss and take 20rs today.

And is there any extra margins required here?
You should not be having any margin as there is no liability that u create for your broker. Only when u sell option, you take an obligation hence brokers collect margin to safegaurd against
that liability. But it depends from broker to broker to best is to check with yr broker.

Happy Trading.
 

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