nifty option

Hi All,
I am a complete newbie .... and just want to know, if i buy call option nifty-50 for 27 may at strike price of 5700 ( current LTP=Rs 18/-) what is the worst case scenario????

To elaborate, in the worst case if the option turns out to be completely worthless...... ( like market crashes and ends up way below 5000 etc etc........) will the most i lose be limited to 50*18= 900 + brokerage?

Thanks a lot to all in anticipation..

Rishi

yes you are right ..loss is limited to 900 + brokrage in any condition .

Ya you loss will be limited when you buy call and put option when you pay the premium that is the most you can loose in any case butif you want to sell the call and put than profit is limited but risk is unlimited.hope this will help you and one more thing i want to tell you that if you are buying call and put option than you will buy it in a less money but if you will sell them so you need more margin so the fund in your account may be blocked so be care full will selling the option.

Hi all,
Thanks for your responses. they have greatly increased my confidence as far as options trading goes.

Just one more querry, on ICICI platform, I saw something called 'good till date' and the i had to chose between day and IOC..... can some one elaborate what that means???

Thanks,
Rishi

Rishi if possible post a screenshot here and the experts just might be able to help you out.

A Good Till Cancelled (GTC) order remains in the system until the trading member cancels it. However, the system cancels this order if it is not traded within a number of days parameterised by the Exchange. A Good Till Days/Date (GTD) order allows the user to specify the number of days/date till which the order should stay in the system if not executed. The maximum number of days for which the GTC/GTD order can remain in the system is notified by the Exchange from time to time after which the order is automatically cancelled by the system. The days counted are inclusive of the day/date on which the order is placed and inclusive of holidays.

An Immediate or Cancel (IOC) order allows the user to buy or sell a security as soon as the order is released into the system, failing which the order is cancelled from the system. Partial match is possible for the order and the unmatched portion of the order is cancelled immediately.

At ICICIdirect.com, all orders accepted are valid for "Day"( One trading day only) or can be IOC . Any unexecuted order pending at the end of the trading session for the day gets expired.

Thanks a lot all!!!!

really happy that i m a part of this forum..... this forum never lets any querries go unanswdered!!! learnt share trading from ground up using this forum and hoping to do the same now with options!!!

Thanks a lot!

Rishi

Rishi, you can also press THANKS button on posts that you like and show appreciation.
Seems you don't know this feature hence pointing it out here.

Rishi, Your query generates worry!!! Yes worry about you!!! The question you asked, though you mentioned that you are a "complete newbie", makes one think whether you should at all dabble in Options with not even the basic knowledge!!!
Not trying to ridicule you, but do go through a few sites giving the basics of Options and how they work!!! You can Google search and read from various sites giving a detailed lessons about Options!!! There is enough material here on Traderji too!!! Use the Advance search option to locate appropriate thread.
Most of us have the impression that buying Options has a limited risk, yes , very true it has limited risk but we should also realise that maximum Options expire worthless, so what use is a "limited risk" if it remains a 'risk' till derivative close!!!
Take care!!! All the best!

Thanks rkkarnani,

I take your advice on board.

I learnt abt share trading through this forum by doing exactly what I am doing rite now.... I started with paper trading and then whenever i had trouble i sought answers from this forum and I was never disappointed. when i started share trading with real money, I did go into red initially b4 finally starting to make regular profits. I believe that going into red initially is part of the process........helps to develop what is known as trader psychology

As far as options go.... I am still doing paper trading, and trying to understand the ICICIDIRECT platform. I am asking querries as and when I have any and ppl like u and all the others have been very kind and patient in answering them.

As far as the options trade goes, if i had actually taken the trade that i mentioned ( 50*18=900+ 110 brokerage) I wud have made about Rs 20-30 per lot today as the option ended the day on Rs 21.

Your concern is very genuine and I appreciate the word of caution. I need ppl like you who can lookafter newbies like me. Thanks a lot for that.

I will add though that I am currently paper trading options and will only venture into real money territory when i am sure that I understand all the nuances. I did exactly same with share trading and hope to add the 'options' skill to my repertoire.

Thanks all for all the help.... appreciate it.

Rishi