Option tradings

raj_hpking

Well-Known Member
#1
Hi,

I would like to trade in Options. Started learning/reading about it. But Traderji is the best source to learn the correct things. So i am opening this thread to learn how to trade in options (NSE). All aspects of option trading.

1) If i buy call option can i sell it before exp. Date?
2) What if i not sell call option before exp date? Will i loose all amount?
 
Last edited:

raj_hpking

Well-Known Member
#2
So no one really dont know answers for the above? Strange.

Anyway, whatever i found on net i am posting here.



Hi,

I would like to trade in Options. Started learning/reading about it. But Traderji is the best source to learn the correct things. So i am opening this thread to learn how to trade in options (NSE). All aspects of option trading.

1) If i buy call option can i sell it before exp. Date?
Ans: There are 2 styles options,
a) American style: - American-style options may exercise at any time before the option expires.
b) European style: - European-style options may exercise only at expiration.

2) What if i not sell call option before exp date? Will i loose all amount?
Ans: Reading this as it has concept of ITM, ATM and OTM related to it. And dont want to write anything without having correct knowledge of these.
 

TraderRavi

low risk profile
#3
Hi,

I would like to trade in Options. Started learning/reading about it. But Traderji is the best source to learn the correct things. So i am opening this thread to learn how to trade in options (NSE). All aspects of option trading.

1) If i buy call option can i sell it before exp. Date?
2) What if i not sell call option before exp date? Will i loose all amount?
1) u can sell any time , as per your wish , just like shares.....
 

raj_hpking

Well-Known Member
#4
1) u can sell any time , as per your wish , just like shares.....
Thanks TraderRavi,

I got the ans for first. But searching for 2nd ans.
There are lot to learn about option before i start. Anyway thanks for your reply.
 

TraderRavi

low risk profile
#5
Hi,

I would like to trade in Options. Started learning/reading about it. But Traderji is the best source to learn the correct things. So i am opening this thread to learn how to trade in options (NSE). All aspects of option trading.

1) If i buy call option can i sell it before exp. Date?
2) What if i not sell call option before exp date? Will i loose all amount?
2) it depends upon option price at expiry.....
 

raj_hpking

Well-Known Member
#6
Hi,

I have below doubt,

As per the attached image (http://www.traderji.com/trading-diary/88670-nifty-options-trading-raj-276.html#post895799), if nifty is presently trading at 6062/- and i have bought NIFTY option call with strike price 6100/- by paying premium 108.75 per share.
Now my doubt is if NIFTY CE is trading at 6080/- but that time premium is 115 per share then if i sell NIFTY call will i get money as NIFTY is still not crossed my strike price?

My understanding is,
1) if NIFTY is at 6100 + 108.75 i.e. 6208.75/- then i will not get anything.
2) if NIFTY is below 6208.75 till option expiry date i will loose all my premium.
3) if NIFTY is above 6208.75 say at 6300/- then i will get 6300-6208.75 = 91.25 per share. If lot is having 50 shares then i will get 50*91.25 = 4562.5/-.

Please let me know if i am wrong at any understanding. And please clear my doubt also.
 

pannalal

Well-Known Member
#7
Hi,

I have below doubt,

As per the attached image (http://www.traderji.com/trading-diary/88670-nifty-options-trading-raj-276.html#post895799), if nifty is presently trading at 6062/- and i have bought NIFTY option call with strike price 6100/- by paying premium 108.75 per share.
Now my doubt is if NIFTY CE is trading at 6080/- but that time premium is 115 per share then if i sell NIFTY call will i get money as NIFTY is still not crossed my strike price?

My understanding is,
1) if NIFTY is at 6100 + 108.75 i.e. 6208.75/- then i will not get anything.
2) if NIFTY is below 6208.75 till option expiry date i will loose all my premium.
3) if NIFTY is above 6208.75 say at 6300/- then i will get 6300-6208.75 = 91.25 per share. If lot is having 50 shares then i will get 50*91.25 = 4562.5/-.

Please let me know if i am wrong at any understanding. And please clear my doubt also.
You can sell nifty call any time irrespective of the price of Nifty Spot. There is only one small practical issue. In India, number of options traders are less, so there may be lot of difference between ask and bid price.

Rest of your understanding is correct.
 

pannalal

Well-Known Member
#8
Hi,

I have below doubt,

As per the attached image (http://www.traderji.com/trading-diary/88670-nifty-options-trading-raj-276.html#post895799), if nifty is presently trading at 6062/- and i have bought NIFTY option call with strike price 6100/- by paying premium 108.75 per share.
Now my doubt is if NIFTY CE is trading at 6080/- but that time premium is 115 per share then if i sell NIFTY call will i get money as NIFTY is still not crossed my strike price?

My understanding is,
1) if NIFTY is at 6100 + 108.75 i.e. 6208.75/- then i will not get anything.
2) if NIFTY is below 6208.75 till option expiry date i will loose all my premium.
3) if NIFTY is above 6208.75 say at 6300/- then i will get 6300-6208.75 = 91.25 per share. If lot is having 50 shares then i will get 50*91.25 = 4562.5/-.

Please let me know if i am wrong at any understanding. And please clear my doubt also.
I have already replied your first question, you can sell any time whatever price (or premium) is available.

For second question, you will get money if Nifty closed above 6100 on expiry date. For example, if Nifty closes at 6150, you will get 50 points. However, you have already paid 108.75, so your net loss will be 58.75. Suppose, Nifty is at 6300 on expiry date, then you get 200 points. But, you have paid 108.75 points, so your net profit will be 91.75 points. Of course, you need to multiply by 50 to convert it into rupees. Further, you need to pay brokerage and transaction tax etc.

However, if Nifty closes below 6100 (or at 6100) then you will not get any point and you will lose 108.75 points paid by you.

I hope now things are clear.
 

raj_hpking

Well-Known Member
#10
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