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Smile Advisory -What is Nifty Options ? What is call and put ? How to trade in Nifty Options ?

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NIFTY 50 9, Select Portfolio and Asset Combination for Display on Market Band. Download ET MARKETS APP. Drag according to your convenience. The futures and options traders sold Nifty options across to strikes, whose premiums or prices have since fallen, making these options worthless.

In a lacklustre market, savvy derivatives traders have pocketed tidy profits by selling Nifty options a fortnight ago as premiums have since then fallen sharply. The futures and options traders sold Nifty options across to strikes, whose premiums or prices have since fallen, making these options worthless for those who purchased them.

If a well-heeled trader expects markets to rise, rather than purchasing a basket of Nifty shares, he can simply buy a call option which allows him to take exposure to the index at a fraction of the cost of a Nifty basket. Similarly, when one expects markets to fall he buys a put option. If the Nifty rises, a call buyer makes money.

S&P CNX NSE Nifty 50 Index Futures and Options Trading Newsletter

If it falls, a put buyer gains at the expense of the seller. However, if markets do not move much, an option trader sells and pockets the premium. For instance, the Nifty most active call option premium has declined to Rs 10 a piece on Thursday from Rs 44 on July Over the same period, the Nifty call has declined by almost half its value toRs 65 over.

The market between end July and Thursday has moved up just 70 points. A trader betting that markets would fall over this period, purchased, say, a Nifty put option of level or strike at the end of July for a premium of Rs His breakeven point BEP would be Same is the case with the buyer of the call option.

At the end of July price was Rs The BEP is He gains only if Nifty breaches the BEP. However, since Nifty is nowhere near this level, the buyer forfeits the premium.

Beginners Guide to Options

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