Options trade in india

That&rsquo s not correct. An option writer can close the SELL option transaction if he/she wants by squaring off. Owner/Buyer of the option need not worry about the opposite party as there will always be equal number of buyers and sellers available all the time for a given contract.

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This is a bearish strategy. It has unlimited loss and limited profit potential. Selling options is not recommended for beginner level traders.

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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 . if you have initially bought 6 lot of CALL (or PUT) option you can square off by selling 6 lot of CALL (or PUT) option with same strike and expiry. Similarly, if you have initially sold 6 lot of CALL (or PUT) option you can square off by buying 6 lot of CALL (or PUT) option.

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However, once you learn the power of put and call options, investing will never be the same again. The versatility and profit potential of options trading is nearly unmatched in the stock market arena.

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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.

It is the fixed price at which owner (buyer) of the CALL option can buy the underlying asset from option seller, no matter whatever is the current price of the underlying asset. Example, If strike price of Reliance CALL option is 6855 that means buyer of this option can buy Reliance stock at 6855 even if the current market price of the stock is higher (say 6555).

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.

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:

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I feel there is no use learning advanced option strategies unless you can make money with the basics, so here I outlined five basic option trading strategies.

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