
Here I have explained first in plain text the difference between buying a stock and buying options for it. Then the same text I have incorporated into a table for comparison and explained the risks and rewards once again. A must read before delving into advanced sections.
In this lesson I am trying to explain the basic terms of option trading and how the option market operates. Do not skip this lesson, because them you will not be able to follow up with more advanced topics.
In this lesson I am trying to explain the option market with the data displayed in the NSE website so that you can catch up with the basic terms, first for one strike price and then for an option chain.
Here In the Money (ITM) and Out of the Money (OTM) concepts are explained with ample clarity.
After completing this lesson, you shall be to understand how to gauge the mood of the market - bullish, bearish or sideways.
Another easy method to understand the mood of the market is to draw a chart with Pivot Point and Resistance and Support Levels. In this lecture and the lecture next to that I shall be explaining these concepts and their application.
Here I shall be discussing supports and resistance after plotting some imaginary current prices on the chart. Listen to it carefully.
One unique feature of option price is its decay over a period of time. Here I am explaining the concept of price decay of options.
Here I am explaining the 1st of my 3 chosen option tricks. Simple to understand, in this strategy I am trying to help you understand how to take advantage of the price decay explained in lecture 7. In a normal year, 70% of the time market moves side ways. This trick is very helpful for sideways market. The relevant spreadsheet can be downloaded from the resources and you can also see the option pay-off chart.
After viewing the video and examining other resources you shall have a clear concept of market volatility, which to some extent is captured by India VIX. Volatility is basically fear factor. The more volatile is the market, the more careful you should be. Avoid taking positions of unlimited risks and carrying forward overnight positions, when India VIX is 25% or higher. India VIX is one of the anchors in risk management in all the three option tricks that I have described. The relevant spreadsheet is available for download. One external link to NSEINDIA website is also provided.
In view of the emerging volatility in the US Market, which is likely to flow into India, partially or fully, I have revised my India Vix thresholds from February 9, 2022. I shall follow these thresholds from now onwards. You may follow them at your wish and risk.
After following this video the learners will understand the difference between limited and unlimited risk in options transactions and also learn how to convert an unlimited risk into a limited risk. Unless the volatility in the market is very low, between 15% to 18%, we should always try to convert positions of unlimited risks into positions of limited risk. The positions of unlimited risk, should ideally be closed within the same trading day by squaring off. One can also curtail unlimited risks by putting STOP LOSS LIMITS. The problem with STOP LOSS LIMITS is it may not always work, particularly in high volatility, high momentum market.
Here I have explained how Black-Scholes calculator is used to project option prices. Also under the resources I have given a Black Scholes Merton model of call calculator to be downloaded.
Here I have explained the second option trick and how to use it for making profit in a bullish market. The relevant spread sheet is also available for download. You can also visualize this trick with the help of a pay of chart enclosed.
This is the third and last option trick explained in this course. This trick can apply in bearish market condition. This trick has to be applied after double checking the market condition and confirming that it is really bearish, otherwise you may end up having losses.Downloadable Excel model and payoff chart is provided.
Here I am explaining which factors are to be used while choosing your broker and the role of brokerage in your scheme of profit.
This is my disclaimer. You must read it thoroughly, before taking real life option transactions and risks.
Here I have explained the break up of option premium also why do we have option premium in the option market.
Here I have discussed all the aspects of implied volatility. Indirectly, I ma also explaining why the new comers in the market shall first hone their skills in the NIFTY 50 market, because implied volatility of NIFTY 50 options are much lower compared to the implied volatility of Bank NIFTY or Stock Options.
Here I have shown example of real transactions that I created using option trick no 1, explained in lecture 8. Here I have made a quick profit following option trick no 1.
If you want to learn Black Scholes Merton Model in greater detail you can join my other course on this at Udemy explaining fully the Black Scholes Model.
This course teaches how to make weekly profit by trading in Nifty 50 Options. I shall in quick sequence give you three tricks or strategies, which even a newcomer in the market can execute. Of all the options available in National Stock Exchange of India, Nifty 50 is it best. It has comparatively a lower volatility and has good volumes too. Nifty 50 offers both weekly and monthly settlement. We shall talk here only of weekly settlements. Rightly traded these options can give good return to capital. In this course I am going to teach you trading in Nifty 50 without losing sight of the risks. I shall discuss the strategy based as well as rule based trading. Extracts of transactions from my own trading account will also be shared,
To be successful in Option trading one must be able to build pay-off charts and forecast future option prices based on Black-Scholes Model. Besides Strategy based transactions, some traders also undertake rule based trading. I am not a great fan of rule based trading. But as a part of knowledge sharing rule based transactions will also be discussed.
Price of options are decaying in nature. I want to show how to take advantage of this price decay to make profit from options by simultaneously trading in two or more options at several strike prices. Overall you should aim at 3% to 4% monthly return on capital (i.e. margin money employed ) , which is a whooping 36% to 48% per year. But if your risks are not properly managed, you can end up losing money also. That is why you need training.
It is a known fact that the Option sellers make more money than the option buyers. But selling options require some more margin money than buying options. How to reduce the margin money requirement, even when selling options will also be discussed. The margin money that you employ in NIFTY 50 trading is fully liquid, at any time during trading hours you can square off your trade and the next day the margin money that you employed is credited to your bank account. You are free to withdraw that money, if you so like.
All in all after completing the course you will have clear understanding of how to make money from trading of NIFTY 50 options.
I have learnt NIFTY 50 Options by trial and error, trying at least 20 strategies over my professional life. . Some cases, I have lost money too and rejected those strategies. From all those strategies, I have filtered only three strategies or tricks, which are effective, time tested, mostly profitable and simple to implement.
I am a trainer and not a financial advisor. You are free to consult any SEBI approved Financial Advisor or Broker in a need based manner.
Please also read my statutory disclaimer also embedded in this training.