Options Basics & Advanced by NSE

[rkkarnani]

mayavi99,

As mentioned, I had purchased NIFTY 50 October Put 5800 at a premium of Rs.95.00, now the premium is 88.50 and the NIFTY 50 as on 17th September, closing is 5884. Will MTM be debited to my account on 20th September, 2010. I dont see any debit to my account. Though the broker has debited Rs.4,750.00 +brokerage on the date of buying, the have not debited any money for the 17th September, 2010 closing. Please advise.

Though it is addressed to mayavi, please dont mind my answering as per my understanding.....

Stockplacement, please!!! please... read the basics and get the basics concept clear... When you "buy" an option, (irrespective of whether it is a Call or a Put) your risk is limited and hence there is no question about MTM, when you are long in Options.... you have already paid the premium and that is the "max" you are going to loose!!
Even if the Nifty closes at 6000 this Month, there will be no further debit to your account....

 

[stocksplacement]

Though it is addressed to mayavi, please dont mind my answering as per my understanding.....

Stockplacement, please!!! please... read the basics and get the basics concept clear... When you "buy" an option, (irrespective of whether it is a Call or a Put) your risk is limited and hence there is no question about MTM, when you are long in Options.... you have already paid the premium and that is the "max" you are going to loose!!
Even if the Nifty closes at 6000 this Month, there will be no further debit to your account....

rkkarnani,

Thanks very much, the problem is that the more i read the more i get confused, may be i am not able to get it, now it is clear and to clarify my doubts, i had to ask this silly questions.

Thanks very much once again.

 

[stocksplacement]

Can you put light on the following, what does disabled contract mean. 30th Septeber 2010 for 6400 Strike is disabled, why, can yu enlighten me.

Disabled Contracts
UnderLying Product Symbol Expiry Date Strike Price Lot Size LTP Option Type Ac
NIFTY OPTIDX 30-Sep-2010 6,400.00 50 415.00 Put Get Quote
NIFTY OPTIDX 30-Sep-2010 6,500.00 50 480.00 Put Get Quote

 

[TraderRavi]

mayavi99,

Thanks, your assumption is correct, I buy the strike price at 5800 PE Oct PUT, you mean i am in profit is it what you are saying? but what about the premium of 4750 that will have to be paid.

Yes, i will have to learn about time decay, my mistake learnt only the basic in which "time decay" not come across, thanks very much, i will be sell it tomorrow since i was not able to sell it, as i am expecting that there will be profit booking tomorrow.

when you bought at 95, you paid 50 x 95= 4750....premium.....now if that premium goes TO 117 as was the case..you sell it and get 117 x 50 = 5850...so you get 5850 - 4750 = 1100 on that day itself..brokerage extra.....

 

[stocksplacement]

Though it is addressed to mayavi, please dont mind my answering as per my understanding.....

Stockplacement, please!!! please... read the basics and get the basics concept clear... When you "buy" an option, (irrespective of whether it is a Call or a Put) your risk is limited and hence there is no question about MTM, when you are long in Options.... you have already paid the premium and that is the "max" you are going to loose!!
Even if the Nifty closes at 6000 this Month, there will be no further debit to your account....

rkkarnani,

Thanks for your reply, just went through the posts again and want to ask another query since could not find it any where. I had puchased the buy Option Call and also buy Option Put for October 28, 2010. Just want to know if i do not book profit or loss at the time of expiry, will there be any other charges to me. Both the Buy Options Call and Put are expirty in October 28, 2010.

 

[sditn]

Hi All, Even you may have a look explanation for options trading in www.hdfcsec.com> knowledge centere> Advanced options where in you may understand the strategies to trade in the same.

 

[stocksplacement]

Hi All, Even you may have a look explanation for options trading in www.hdfcsec.com> knowledge centere> Advanced options where in you may understand the strategies to trade in the same.

Thanks,

Since some info are not clearly understood from the options also.

Just want to know one thing

CALL

CALL BUY = LIMITED LOSS TO THE EXTEND OF PREMIUM AND UNLIMITED PROFIT
CALL SELL = LIMITED PROFIT TO THE EXTEND OF PREMIUM AND UNLIMITED LOSS


PUT

PUT BUY = LIMITED LOSS TO THE EXTEND OF PREMIUM AND UNLIMITED PROFIT.
PUT SELL = LIMITED PROFIT TO THE EXTEND OF PREMIUM AND UNLIMITED LOSS.

Is the above correct practically when i do trading.

 

[thomasmadee]

dear Mr. Karnani,

ive just joined traderji and new to options trading on icicidirect. i have a few queries. if you can help. please reply

 

[trump]

Thanks,

Since some info are not clearly understood from the options also.

Just want to know one thing

CALL

CALL BUY = LIMITED LOSS TO THE EXTEND OF PREMIUM AND UNLIMITED PROFIT
CALL SELL = LIMITED PROFIT TO THE EXTEND OF PREMIUM AND UNLIMITED LOSS


PUT

PUT BUY = LIMITED LOSS TO THE EXTEND OF PREMIUM AND UNLIMITED PROFIT.
PUT SELL = LIMITED PROFIT TO THE EXTEND OF PREMIUM AND UNLIMITED LOSS.

Is the above correct practically when i do trading.

well there is nothing "unlimited" practically, it never happens, there is limit to everything, but when you buy an option the premium you paid can become zero, but when you sell/write an option , you take the risk and risk is always a dynamic entity and that's why many call the risk as unlimited, you can lose lot more than the premium the seller gets in his account, that's why they call unlimited, again it depends on the strike, premium, Delta, Theta and Vega.
Its really tricky to explain/define a option,

 

[toughard]

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