How to trade nifty options profitably
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Here's the response to their queries. You can mail your queries to stockfundoo rediffmail. I am interested in trading in stock and nifty options. Can you please guide on how to be profitable in options trading.
O ptions are a major trend in Indian stock markets now, with turnover in options category being significantly higher than that of stocks, index or derivatives category. Just to take an example, on February 23, , turnover for index futures at NSE was Rs 7, crore, turnover for stock futures was Rs 16, crore and turnover for index options was a whooping Rs 87, crore. So options have become an instrument of choice for traders -- both retail and institutional traders -- in Indian stock markets.
As our Finance Minister remarked recently, Indian markets are primarily non-delivery based, meaning majority of trades do not result in deliveries and are cash settled.
Options in Indian market are cash settled as well with no delivery taking place at the option expiry date which is always the last Thursday of every month.
Simply speaking, an option is a bet on direction of either the underlying index e. Nifty or a given stock. Options are basically of two types: A buyer for a call option is taking a position that underlying instrument e.
A buyer of put option is taking the opposite position that the underlying instrument e. However, there are few more things to keep in mind, before you jump in options trading. One should be aware of the strike price and days remaining before expiry as well. Options decay in value as their price is dependent on variable known as theta, which is also known as the rate of decay. Simply speaking, if you are an options buyer, your options will lose a little bit of value each day, even if the underlying instrument is not moving at all, due to time decay.
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Due to this reason, professional traders or large institutions are biased towards options selling, rather than options buying, as they can benefit from this time decay if underlying instrument is not moving at all. However, option selling is akin to selling insurance and hence is detrimental to an individual retail trader as the potential liability can be significant if volatility increases overnight.
A trader expecting the stock or index price to change dramatically in next few days can buy an options straddle. A long straddle involves purchasing both a call option and a put option on the same stock or index at the same strike price and expiry date. For example, if Infosys is coming up with its quarterly results and investors are not sure whether it will be a positive result or not, one can buy a call option and put option at same strike price, preferably closer to current stock price.
If results are good, call options would rise in price and would make up a profitable trade, else if results are less than expected put options would result in profits for the trader. Another simple way to trade in options for a trader already holding a stock is to execute a covered call.
This strategy has to be adopted in bearish markets for stocks which are not expected to rise in price. If a trader is holding a stock in cash segment, he can sell the corresponding call options for the stock. This is a useful strategy for slightly bearish markets.
This is a simple primer, however options trading is a complicated subject and one needs to do significant research before jumping into options trading. With the high options volumes witnessed in Indian markets, options trading is much more coveted than cash trading or futures trading and here to stay for long. This article is for information purpose only. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons.
Opinions expressed herein are subject to change without notice. Powered by fundamental deep value investing and technical analysis, we offer detailed stock analysis updated on a daily basis.
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Will I get my investment price within 2 years? D elta Corp is a concept stock and is the only listed Indian company in casino business. Delta Corp operates two offshore casinos in Goa and another onshore casino is coming up in Daman region.
Delta Corp is launching its onshore gaming operations in the Union Territory of Daman as well. Third offshore casino is also set to be operational in Goa shortly. From its Goa based offering, Casino Royale is currently India's largest live offshore gaming casino with gaming positions.
Casino Caravela is another live casino offering gaming positions. In hospitality space, Delta Corp owns Daman Hospitality Pvt. Ltd DHPL , which owns the largest resort and convention complex in Daman.
The hotel is in the five-star deluxe category with rooms, 29, sq ft of indoor events and meeting space and 70, sq ft of outdoor pools and events space. Latest revenues for Delta Corp were sales of Rs This is lower in comparison to YoY revenues for Delta Corp. For the Dec quarter the revenues were Rs This slowdown in revenues and profits has impacted the stock price.
Looking at charts, Rs was the highest price ever for Delta and you seem to have entered at its peak. Technically support for Delta Corp is at 51, and it would be a tough bet to get Rs in the near future.
Resistance levels are at Rs 84 and at Rs You should aim for Rs in next months. Please provide your views on TransGene Biotek. I am holding this stock from a very long time.
T ransgene Biotek is a very interesting microcap stock. It has two decades of biotech expertise and unfortunately markets don't value stocks like this properly, because of lack of visibility and business model. Transgene began as a firm manufacturing and selling diagnostic kits and moved on to biotech research, including the research and development of vaccines. One of its first major successes was development of genetically engineered Hepatitis B vaccine technology which was sold to Serum Institute, Pune in , which continues to sell vaccines based on this technology.
It has a sizable portfolio of under development drugs and any more blockbuster success from this portfolio will move the scrip in positive direction. Looking at charts, the firm has seen crazy heydays when stock was worth Rs apiece, and currently it is trading at 99 per cent discount to that price. So what has gone so wrong for Transgene? One, promoter shareholding is less than 10 per cent. That sends the signal that effectively no one really owns the company now.
Secondly, there was an attempt at delisting, which failed. Thirdly, large scale selling by GDR holders, the foreign ownership has come down from Overall, support may come at Rs 2.
Any more blockbuster drugs to unlock may cause the series of upper circuits once again. Existing shareholders should hold, however new investments is only for investors with high-risk appetite.
I have shares of Jain Irrigation Systems at Rs per share. Please suggest what to do, I can wait for years for good returns? J ain Irrigation is a marquee firm in Drip Irrigation technology and has proven products and technology in this space. The firm has many firsts to its name.
Jain irrigation is pioneer of micro irrigation systems in India and is the largest irrigation company in India. Other than its irrigation division, in its Pipe Division, the firm is the largest manufacturer of Plastic Pipes in India. Firm has a successful food processing business as well and is initiating new business in solar panels as well.
The challenge that Jain Irrigation faces is over dependence on making sales through government subsidies and hence the firm is making a transition away from this business model. For the latest quarter profits have in red. Revenue is flattish from past five quarters and new business model is yet to make serious inroads. Promoter holding has also come down in last quarter from 31 per cent to The firm is a regular dividend paying company.
Technically speaking, it has a support at 60 and can be expected to reach Rs 90 levels from here on. One can average a bit here and new investors can take an entry here with a SIP kind of investing in mind. I am holding shares of SHREE RENUKA SUGAR at Rs 55 per share.
Could you please suggest whether to average at current price for good profits in next 1 year? S hree Renuka Sugars is one of leading manufacturer of sugar in India, and one of the largest sugar refiners in the world. The company operates eleven mills globally with a total crushing capacity of The company operates seven sugar mills in India with a total crushing capacity of 7.
In its ethanol business, firm manufactures fuel grade ethanol that can be blended with petrol. Global distillery capacity for ethanol is 6, KL per day KLPD.
In its power generation business, firm produces power from sugar cane by-products for its own consumption and also for sale to the state grids in India and Brazil.
Total power cogeneration capacity is MW with exportable surplus of MW. Quarterly revenues of Renuka are in uptrend and have grown from Rs crore in Dec 11 quarter to Rs crore in last quarter Dec Firm is trading close to its book value of Rs Technically speaking, sugar stocks are consolidating for long and Renuka is currently at 75 per cent discount to its peak price of Rs Technical Support is nearby at Rs 26 and one can average this stock at the current price or even take a fresh entry.
ZaraBol - Trending Topics. NewsApp Free Read news as it happens Available on. How to make money in Options Trading. How to make money in Options Trading Last updated on: Narendar Lokwani of StockFundoo advises about good, bad and ugly stocks. Another way to benefit from options is to take a combination trade in options. NSE , Narendar Lokwani , StockFundoo , Indian. Transgene Biotek , GDR , Serum Institute , Hepatitis , Pune.
MTPA , Shree Renuka Sugars , SHREE RENUKA SUGAR , India , KLPD.
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