How to minimise loss in bank nifty
Things you must know before entering in trade to Bank nifty?
An index comprising 12 state-owned and private sector banks. Like the Nifty, those bullish on banks can buy Bank Nifty futures comprising 30 shares, or buy a call option on Bank Nifty. Bears can similarly short or sell Bank Nifty futures or buy a put option on the index.
Yes, it is possible to trade nifty or stock options intraday. Many traders do it by opening a position at the start of the day and closing it at the end of market hours. The process to do intraday trade is similar to making any Options trade. However, keep an eye on two important data: volume and price fluctuation. There should be sufficient volume in the strike price so as to sell it whenever desired. Also, the index needs to have sufficient price fluctuations to make a profit in a day. A call option in Bank Nifty gives you the same right, as any other option, to buy the underlying at a specified price and with a specified time period. The same holds for a Put option in Bank Nifty.
An index comprising 12 state-owned and private sector banks. Like the Nifty, those bullish on banks can buy Bank Nifty futures comprising 30 shares, or buy a call option on Bank Nifty. Bears can similarly short or sell Bank Nifty futures or buy a put option on the index.
Yes, it is possible to trade nifty or stock options intraday. Many traders do it by opening a position at the start of the day and closing it at the end of market hours. The process to do intraday trade is similar to making any Options trade. However, keep an eye on two important data: volume and price fluctuation. There should be sufficient volume in the strike price so as to sell it whenever desired. Also, the index needs to have sufficient price fluctuations to make a profit in a day. A call option in Bank Nifty gives you the same right, as any other option, to buy the underlying at a specified price and with a specified time period. The same holds for a Put option in Bank Nifty.
You buy a Bank Nifty Call Option when you are bullish on the market and buy a Bank Nifty Put Option when you expect the price of the underlying to go downward. Trade-in bank nifty tips with one of the best bank nifty tips provider company in India.
Options are of two types - Call Options and Put Options
- Call Options give you the right, but not the obligation, to buy an option contract.
- Put Options give you the right, but not the obligation, to sell an option contract.
Example of a Call Option
You buy a call option on TCS for October at the strike price ₹2000 at a premium of ₹200 for a lot size of 100 shares. This gives you the right to buy 100 shares of TCS at ₹2000 anytime from now until the end of October. To earn this right, you pay a premium of 100 X ₹200 shares= ₹20,000. Now, if the price of the option at any time before expiry is higher than ₹2100, then you may exercise the options and earn profits. Say the option price is ₹2150. You will get-
₹150 (Strike Price- Market Price) X 200 shares= ₹30,000.
Your profits will be ₹30,000 - ₹20,000 = ₹10,000.
In case, your option didn't do well in that period and remained below ₹2000 then you can choose to opt-out. In that case, you will only lose the premium amount of ₹20,000.
Example of a Put Option
You buy a Put option on TCS at the strike price of ₹2000, at a premium of ₹100 for a lot size of 100 shares. You pay a premium of ₹100 X 100 = ₹10000 while buying the option. If the Price of the TCS option remains below, then you will earn profits by selling the option. However, if the stock price remains higher than the strike price then you could choose not to exercise the right and will only lose the premium.
Comments
Post a Comment