Option trading help needed

#2
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#3

columbus

Well-Known Member
#4
How options UPPER circuit & LOWER circuit are decided.
In case of Equities it is flat 20% of previous closing.(Of course Nifty
and Sensex scrips are exempted).

Why it changes within the day?.Today one scrip had UC at 8.2
and LC at 2.2.once LC at hit ,LC changed to 1.65.
Even this at hit and LC changed to 0.05.(default value ???)

Couple of series back ,on Expiry day LTP was finding it difficult to go beyond
12.00Rs (at 1445) and retreated to 9.00Rs.All of a sudden it went beyond
90.00Rs.If one takes into account HIGH/LOW ,it was in few thousand.(Or
with previous day closing).How on EXPIRY day UC and LC are calculated?

I never bothered to pay attention to UC & LC previously,but not now.
 
#5
Hi

option traders are classified into 2 category:
Category 1:Option buyer [ which means first BUY ing securities CE/PE & selling those positions as and when you feel to close the loop,before the end of EXPIRY]
CATEGORY 2: oPTION WRITER [in this, you are selling the securities at high price & buy it later when it comes to low price, just a recerse method of category 1.
 

DanPickUp

Well-Known Member
#6
Dear Sonika

As you seem to not understand what options are even reading many threads in this forum, it will be difficult to suggest you any thing, as options have been explained professionally in many ways in this place include from me. Somebody could get the thoughts that options here are explained to complicated or the wrong way, but that is in no way the case. There are various threads from different writers about options and those threads have various levels. So choose the level you are comfortable with and keep the other threads for later.

As you may have read any of those threads you should at least be on a level to ask very specific questions about what you not understand and not just: I do not understand options. Post those very specific question here or in other specific threads and you will get an answer.

Do not follow any threads from members which want to show of with option or even future calls as long as those threads are not learning threads or entertainment threads, which we have a few in the General trading and investment chat section of this forum.

As daily option learning threads you can for example follow Escapes thread or Muinalis thread (Links are posted). Option trading mistakes done during trading are spotted on or discussed in those threads. The only problem with those threads are that both of them do only directional trades and less non directional option strategy trading. And options are very helpful and powerful when it comes to use them in conjunction with other derivatives or by combining them under each other.

Even than: Following those guys may helps you to get a better, basic feeling and a better, basic practical understanding for the derivative. In this specific cases you will get it for simple directional trading. By following such threads you learn about it day by day in little steps and that is what you may need for your situation with the time you can spend for learning about option and option trading. Later on, after you have that basic feeling and understanding for at least directional option trading, you then can try the next level which would be to start trading simple option strategies like spreads. To learn about that you choose AW10 threads or you may even start to study in dept what was posted from my side about options.

Other threads you can follow are from Columbus, in where you will get a feeling for Open Interest and what it means in your market. There are surely more such good option learning threads around in the forum. It is just that I not know every thread here and so I am sorry for the god threads I could not mention because of that reason.

http://www.traderji.com/trading-diary/73862-escapes-options-trading-diary-phase-2-a.html#post723003

http://www.traderji.com/options/77467-muinalis-way-learning-how-trade-options.html#post750996

http://www.traderji.com/options/70810-banknifty-puts-calls.html#post697064

http://www.traderji.com/options/66083-put-call-options.html#post638505

http://www.traderji.com/options/305...ading-strategy-option-spreads.html#post333541

As a last link I will post this one http://www.optionseducation.org/getting_started/options_overview/what_is_an_option.html which is the official home page from the option industry council in the US. Not sure if you have some thing like that in your country. If you think it may helps to read there, surely a good way to do so as also there you get a very precisely and good idea about what options are.

Good learning / DanPickUp
 
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rkkarnani

Well-Known Member
#8
How options UPPER circuit & LOWER circuit are decided.
In case of Equities it is flat 20% of previous closing.(Of course Nifty
and Sensex scrips are exempted).

Why it changes within the day?.Today one scrip had UC at 8.2
and LC at 2.2.once LC at hit ,LC changed to 1.65.
Even this at hit and LC changed to 0.05.(default value ???)

Couple of series back ,on Expiry day LTP was finding it difficult to go beyond
12.00Rs (at 1445) and retreated to 9.00Rs.All of a sudden it went beyond
90.00Rs.If one takes into account HIGH/LOW ,it was in few thousand.(Or
with previous day closing).How on EXPIRY day UC and LC are calculated?

I never bothered to pay attention to UC & LC previously,but not now.
Columbus, Are you referring to UC and LC in "Option" pricing here??

From NSE site :
For Index and Stock Options: A contract specific price range based on its delta value is computed and updated on a daily basis.
In view of this, orders placed at prices which are beyond the operating ranges would reach the Exchange as a price freeze.
 

columbus

Well-Known Member
#9
Columbus, Are you referring to UC and LC in "Option" pricing here??

From NSE site :
For Index and Stock Options: A contract specific price range based on its delta value is computed and updated on a daily basis.
In view of this, orders placed at prices which are beyond the operating ranges would reach the Exchange as a price freeze.
rkkarnani,

I am referring to UC and LC in OPTIONS.
My doubt ,is why UC & LC are changed within the DAY? Whether Delta
is calculated on hourly basis?
 

columbus

Well-Known Member
#10
Hi

option traders are classified into 2 category:
Category 1:Option buyer [ which means first BUY ing securities CE/PE & selling those positions as and when you feel to close the loop,before the end of EXPIRY]
CATEGORY 2: oPTION WRITER [in this, you are selling the securities at high price & buy it later when it comes to low price, just a recerse method of category 1.

Category.1:Option Buyer.
If you have enough money in account equivalent to Premium*No.of Lots you can buy it.

Category.2:Option Writer.
If you have enough money in account equivalent to Premium*No.of Lots you can not buy
it.You need to pay extra Upfront Margin of ~30K per ONE Nifty lot.(Based on brokerage firm).
 
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