Where can I get the lot size information? Registered all NSE Future option tips. About Equities About Equities The Equity market also known as the stock market is where the listed securities are traded in the secondary market. For Intraday system package prices are near real-time. You may cancel your free trial at any time and will not be charged. The Equity market also known as the stock market is where the listed securities are traded in the secondary market.
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Website owner is not responsible for any Loss due to your own Decision or Judgement. Thanks for Visiting our Website. We are using cookie to track your visit and Basic information. Gold Prices to Trade Upside Today: Neal Bhai Reports September 14, September 14, September 14, 9: September 12, 4: Rise or fall in the open interest may be interpreted as an indicator of the future expectations of the market.
A rising open interest number indicates that the present trend is likely to continue. If the open interest number is stagnant, then it may suggest that the market is in a cautious mode. If Open interest starts declining, then the market suggests a trend reversal mood. In a rising market, continuous decline of open interest indicates an expectation of downward movement.
Similarly, in a falling market, the decline of open interest indicates that the market expects an upward trend. Volume is the number of contracts of a particular option contract that have traded on a given day, similar to it meaning the number of shares traded on a particular stock on a given day. Open interest is the number of option contracts for a particular stock at a specific strike price and a specific expiration date that were open at the close of trading on the prior trading day.
A common misconception is that open interest is the same thing as volume of options and futures trades. This is not correct, as demonstrated in the following example. PCR is a very popular indicator to measure the prevailing level of bullishness or bearishness in the market. Remember Put contract is bought by investors who are bearish and Call contracts are bought by people who are bullish.
PCR is calculated as:. As this ratio increases it means that investors are putting more money into put options rather than call options. There are different ways you can interpret this information to gauge market directions. Although options are derived from stocks or indexes but they are traded as independent securities in the markets. You can compute the fair value of options using Binomial or Black Scholes formulas. We do provide theoretical value of options in our web-site using Black-scholes model.
Exercising a stock CALL option means buying the stock at the price set by the option strike price , regardless of the stock's price at the time you exercise the option. Exercising a stock PUT option means selling the stock at the price set by the option strike price , regardless of the stock's price at the time you exercise the option. The stock is currently trading at Rs. You square off options position when you want to close your existing position.
Square off can be done by taking the exactly opposite position for e. You may want to exercise your option when you want to take delivery of underlying stock or Index. If you want to book profit or cut your losses, you may want to close out your position by squaring off. If the option is of American style then it can be exercised any day when the market is open before its expiration.
In case of European options it can be only exercised on the expiration day. Yes, you can close out your position by squaring off which in short means taking the reverse position. You can sell the underlying stock as soon as you give instructions to your broker to exercise.
We suggest you also double check with your broker if there are any deviations and special rules apply. If you believe that the stock has made its move to large extent and there is not much scope of further movement in your anticipated direction then it you may want close out the position by squaring off. On the other hand if you believe that there is lot more steam left and the stock will go a long way, you can continue to hold your position.
When the holder buyer of options exercise the option writer seller is said to be assigned the obligation to deliver the terms of option contract. If it is a CALL option the writer seller needs to deliver the obligated quantity of the underlying security at the strike price. In case of PUT option the writer seller needs to buy the obligated quantity of the underlying security at the strike price.
Assignment is done on a random basis. The clearing house picks short positions that ae eligible to be assigned and then allocates the exercised positions to any one or more short positions.
All in the money options whether American or European style are automatically exercised by the clearing house. There is no way to know if you could get assigned. If you have sold an option there is always a possibility of getting assigned on any business day before expiration in case the option is American style to fulfill your obligation to receive and pay for or deliver and get paid for shares of underlyer stock.
There are some general rules that you should keep in your mind: Only small portion of options actually get exercised 2. Majority of options get exercised when they get closer to expiration. I you continue to hold your option sell position you cannot eliminate the posibility of being assigned. You can close your position any time by squaring off your position i. All in the money options are exercised automatically during the expiration day.
For details please contact your broker. In this case market adjusts the price of the options considering the dividend announcement. All active contracts will continue to exist until the last day as declared. After that no more contracts on this stock will available for trading. If you are holding such an option your position will be exercised and settled on last day.
It is always advisable to check with your broker regarding such announcements. Selling options are only recommended for experienced investors. No, you keep the premium but you still need to deliver the underlying stocks to the options holder. Options spreads are the basic building blocks of many options trading strategies. A spread position is entered by buying and selling equal number of options of the same class on the same underlying security but with different strike prices or expiration dates.
Refer our StrategyFinder tool to see real tradable strategies which also includes spreads. If you do it from the same trading account it will offset each other. If you do it from different accounts then you will have a flat position from economic perspective. There is no visible advantage in doing so. Margin is the amount of cash you need to deposit with your broker as a collateral if you want to write an uncovered naked option.
You also need to maintain margin to cover your daily position valuation and reasonably foreseeable intra-day price changes. When you short sell an option there is unlimited risk involved if the stock moves in opposite of your expected market direction. There is always a possibility that the seller will not be able to fulfil his obligation to deliver the terms of the contract due to lack of funds.
If the options price has increased significantly and the seller wants to close out his position by buying out the option there is possibility that he may not have sufficient funds in his account. This kind of situations will prevent markets from functioning efficiently as the counter party wont be able to get his payment. To avoid these kinds of circumstances the concept of margins were introduced in all markets across the world.
Volatility is a measure of the rate and magnitude of the change of prices whether up or down of the underlying. To put it simply you can view volatility as the speed at which price of underlying can move in either direction. If volatility is high, the premium on the option will be relatively high, and vice versa. You can find out the applicable margin from your broker.
Many online brokers like www. Yes, you will get margin benefits in this case. However, the benefit will be removed three days prior to expiry if the near month contract. Long Call options have positive deltas, whereas Long put options have negative delta whereas Short Call options have negative delta, and Short put options have positive delta. Let understand using couple of examples. Basically, Gamma measures the amount by which delta changes for a 1 point change in the stock price.
For example, if Gamma of an option is 0. Long calls and long puts have positive gamma whereas short calls and short puts have negative gamma. One common scenario when option Vega changes is when there is a large movement in underlying price.
Long calls and long puts both have positive vega where as short calls and short puts will always have negative Vega. Option theta can be interpreted as change in the price of the option with one day decrease in the remaining life of the option. To put is simply it is a measure of time decay. Note that longer the life of an option, the higher will be the premium and vice versa. With each passing day the value of option decreases considering all factors equal.
When you want to buy an option you probably want to know what is the fair value of the option is and what should be the fair price of an option, whether the option is under-valued, over valued or rightly valued. You can get answers to these questions by calculating the theoretical value of an option. There are many mathematical models and formulas available which can be used.
These are mathematical models that can be used to calculate the theoretical value and greeks of options. If you consider option Greeks in taking decisions to buy or sell options you are basically increasing your probability to make a profit in your trades.
Users registered to the website can search and build tradable options strategies. The Clearing Corporation ensures that trading member obligations are commensurate with their networth.
NSE Clearing carrries out the clearing and settlement of the trades executed in the equities and derivatives segments of the NSE. It operates a well-defined settlement cycle and there are no deviations or deferments from this cycle. It aggregates trades over a trading period, nets the positions to determine the liabilities of members and ensures movement of funds and securities to meet respective liabilities.
The higher the Percent of Deliverable Quantity to Traded Quantity the better - it indicates that most buyers are expecting the price of the share to go up. Equities The securities market has two interdependent and inseparable segments, the new issues primary market and the stock secondary market.
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