16-Sep-2021
CALL / PUT
To trade in the options market, first of all, you have to predict in which direction the market will move, uptrend, downtrend, or sideways, that is, your market view should be clear. Hello, Friends, We are discus about options settlement style types, market trend, lot size, expiry..
You all know that according to Dow Theory there are 3 types of market outlook: Bullish Market i.e. Uptrend. Bearish market ie downtrend neutral market ie sidewise
An option is a contract consisting of 2 parts
first call option contract
second put option contract
A call option is also called CE i.e. call European and a put option is also called PE i.e. put European. There are mostly two types of option-style settlement around the world, European-style settlement and American-style settlement. Our country has a European-style settlement. Trading in the European style takes place on the day of contract expiration. The same American-style trade agreement can be made at any time between the contract's purchase date and the expiration date. Also known as CA i.e. Call American and PA Put American...
A call option has a call buyer and a call seller, the same put option also has a put buyer and a put seller.
Now that we understand buyer and seller of calls, then we will understand buyer and seller of puts.
What is a Call Buyer? You can buy by paying. Let us understand with the example of Nifty
Now that we understand what a call seller is, if your market view is bearish, you can sell calls. What we call writing. If you are a writer then you have to pay the full margin money of that contract. Because you get the full premium of the buyer.
Let us understand this with the example of Nifty also, it is the case of call buyer and seller, now let us understand what has put buyer and put seller. If the outlook is bearish, you can buy a put there. Where you know that only premium has to be paid.
What is a Put Seller - If your market view is bullish then you can sell a put. Where you have to pay the full margin money of the contract because even on this you get the full premium money of the put buyer. On this, you came to know about Call Buyer…Call Seller…and Put Buyer…Put Seller.
Here in the contract you can take both buy and sell positions. Where the buyer has to pay the premium, the seller has to pay the full margin money. That would be the premium amount only.
The amount of premium received i.e. the seller can have an unlimited loss while the profit will be limited which will be primary only received. Options like to buy and walk, so if the market is blue, they buy calls and if the market is bearish, they buy puts, i.e., if there is a bounce or bearish, in both cases, buy to earn. Benefit. …………..
Options trading is mainly done in 3 segments. (1) Nifty (2) Banknifty (3) Stock... Where we call Nifty and Banknifty as Index, the same stock is called Equity Derivative. We can also do options trading in currency, commodity, and interest rates. Now let us understand the options contract expiry, when and in how many days the contract expires. Like Nifty and Banknifty have both weekly and monthly expiry. The contract expires on the Thursday of every week. If Thursday is a holiday then it will end 1 day earlier i.e. if Wednesday is also a holiday then it will end 1 day before that i.e. Tuesday. .. Monthly expiry of the same stock is the expiry of the stock on the last Thursday of every month. Let us now understand the lot size.. The number of shares in a certain quantity is called a lot. Banknifty has 1 lot of 25 quantity. 70000 Quantity is 1 lot. .. As per SEBI guideline, the number of lots may increase or decrease in the lot.
You all know that according to Dow Theory there are 3 types of market outlook: Bullish Market i.e. Uptrend. Bearish market ie downtrend neutral market ie sidewise
An option is a contract consisting of 2 parts
first call option contract
second put option contract
A call option is also called CE i.e. call European and a put option is also called PE i.e. put European. There are mostly two types of option-style settlement around the world, European-style settlement and American-style settlement. Our country has a European-style settlement. Trading in the European style takes place on the day of contract expiration. The same American-style trade agreement can be made at any time between the contract's purchase date and the expiration date. Also known as CA i.e. Call American and PA Put American...
A call option has a call buyer and a call seller, the same put option also has a put buyer and a put seller.
Now that we understand buyer and seller of calls, then we will understand buyer and seller of puts.
What is a Call Buyer? You can buy by paying. Let us understand with the example of Nifty
Now that we understand what a call seller is, if your market view is bearish, you can sell calls. What we call writing. If you are a writer then you have to pay the full margin money of that contract. Because you get the full premium of the buyer.
Let us understand this with the example of Nifty also, it is the case of call buyer and seller, now let us understand what has put buyer and put seller. If the outlook is bearish, you can buy a put there. Where you know that only premium has to be paid.
What is a Put Seller - If your market view is bullish then you can sell a put. Where you have to pay the full margin money of the contract because even on this you get the full premium money of the put buyer. On this, you came to know about Call Buyer…Call Seller…and Put Buyer…Put Seller.
Here in the contract you can take both buy and sell positions. Where the buyer has to pay the premium, the seller has to pay the full margin money. That would be the premium amount only.
The amount of premium received i.e. the seller can have an unlimited loss while the profit will be limited which will be primary only received. Options like to buy and walk, so if the market is blue, they buy calls and if the market is bearish, they buy puts, i.e., if there is a bounce or bearish, in both cases, buy to earn. Benefit. …………..
Options trading is mainly done in 3 segments. (1) Nifty (2) Banknifty (3) Stock... Where we call Nifty and Banknifty as Index, the same stock is called Equity Derivative. We can also do options trading in currency, commodity, and interest rates. Now let us understand the options contract expiry, when and in how many days the contract expires. Like Nifty and Banknifty have both weekly and monthly expiry. The contract expires on the Thursday of every week. If Thursday is a holiday then it will end 1 day earlier i.e. if Wednesday is also a holiday then it will end 1 day before that i.e. Tuesday. .. Monthly expiry of the same stock is the expiry of the stock on the last Thursday of every month. Let us now understand the lot size.. The number of shares in a certain quantity is called a lot. Banknifty has 1 lot of 25 quantity. 70000 Quantity is 1 lot. .. As per SEBI guideline, the number of lots may increase or decrease in the lot.