How to trade in nifty options for intraday gain

How to trade in nifty options for intraday gain: Nifty is benchmark index of Indian stock market every trader want make money with trading of index options trading because how high volatility and less capital investment with hope of huge profit.

How to trade in nifty options for intraday gain

What is nifty options: 2 types of options are available for trade one is call option and second is put option. Both options are available with contract expiry date and strike price.

Check: Best penny stocks to buy for long term growth

How to trade in nifty options examples
How to trade in nifty options examples

Call Option: When you trade call option with buy position traders have limited liability and chances of unlimited profit.

If trader is buying call option he/she thinking nifty go up if they are selling call option thinking nifty will go down.

For all examples of nifty we are thinking nifty have market lot of 75.

Example: Nifty is trading at 10,000 and you bought a Call Option (CE) of 10,200 at price of Rs. 50 and nifty close on expiry at 10500 then what is profit and loss on expiry.

10,500 (Nifty Closed) – 10, 200 (Strike Price) = 300 (Points)

What is profit and loss if you buy call options of 10, 200CE at 50.

Total Investment 50×75 = 3750

Total Profit 300×75 = 22500

Net Profit = 18750

Now I tell you if nifty closed below strike price nifty how to trade in nifty options examples.

How to trade in nifty options for intraday gain

With same above mention position nifty this time closed below strike price at 10,100 and you have call option (CE) of 10,200 at R. 50.

What is profit and loss if nifty support closed at 10,100.

Total Investment 50×75 = 3750

Net Loss = -3750

On other side when you trade call option with sell position traders have maximum liability and all limited profit.

Sell position of CE options at strike price of 10200 at Rs 50. When you trade with sell position you have to pay margin of nifty future.

What is profit and loss if nifty closed at 10500.

Investment = Margin of nifty future

Net loss 10500 – 10200 (Nifty Strike Price) + 50 (Premium Value of Call Option = 250

Net Loss 250*75 = 18750

On same position if nifty closed below 10200 profit is 50*75 = 3750 if nifty closed at 10230 ten profit is 20*75 = 1500

Put Option: When you trade put option with buy position traders have limited liability and chances of unlimited profit.

If trader are buying put option then they are thinking nifty will go down on other side if they are selling put option thinking nifty will go up.

For example you buy put of nifty 10,200 (strike price) at Rs. 50 and nifty closed at 10,000 your profit will be 10,200 – 10,000 = 200*75 profit is 15000

On other side if nifty closed at 10300 you don’t get any profit just loss premium amount of 50*75 = 3750

How to trade in nifty options examples

Why trade in nifty options: Most of trader think option are trading substitute with chance of limited loss and huge profit in future and options segment. After all they bet on direction of nifty price. Now I tell you how to trade in nifty options examples.

Important points How to trade in nifty options for intraday gain that we have to study before execute our trade is which the best strike option for trade is.

Start following nifty price on daily basis if possible start note somewhere high and low price of nifty.

Nifty options trading plan for down trend

Nifty mostly trade in limited range for 4 -6 months for example from June 2016 to December 2017 nifty trade in the range of 9600 – 10200 this kind of range always nifty follow for limited time.

Trader always 3 – 4 times chance of trade in between this range now hoe you make money in down trend once nifty reach it upper range of trading start buying puts of next months.

Buying put option trading limits your risk to premium paid while buying the option, so your risk is limited while profit potential is unlimited.

Only thing to remember for how to trade in nifty options for intraday gain is try to buy nifty put option when market move in opposite direction of short term trend.

Nifty intraday trading tricks in options for bullish market.

as we disused above nifty mostly trade in range of 500 to 600 points. If you want to trade with buying position buy nifty call option when nifty reach at lower range of trading level of last 4 – 6 months and hold your position till expiry of contract.

Why we have to hold position till expiry of contract because mostly sharp move come near expiry of future contract.

Never try to average nifty option price if your trade not fever you.

How to trade in nifty options examples near expiry level

In the money nifty options are best when expiry is near, because of low premium and high volatility.

When the expiry comes near this premium also gets reduced sharply and if you have observed then you will find all the out of money nifty options expire worthlessly i.e. becomes 0 (zero).

If you chose in the money nifty options, they will trading near original value of nifty. Like Nifty future is trading at 10035 level, nifty 10000 call option must have value of at least 45 (its real value).

When Nifty future moves to 10090 then nifty 10000 call option will be trading at least at 90 But if nifty future is trading at 9950 level, then nifty 10000 call options would be at 5 or 10 only and if nifty expire below 10000 then nifty 10000 call option will become zero at expiry.

Choose best strike price for  maximum profit

Profit margin in nifty options trading depends on its strike price that a trader chooses. A strike price in nifty option has much to do with number of days left for expiry.

If expiry is near then you select in the money nifty option, if expiry has time then you choose out of money nifty option.

Here is how I choose the strike price depending on time left for expiry:

As we discussed above about track nifty trading range of 4 – 6 months if you want to create position on higher and lower range how to choose suitable strike price.

If the nifty expiry is 2 months away you choose options which are out of money, example: If nifty future is trading at 9600, then you buy nifty 10200 call option.

When Future and option expiry is just 2 trading days away, then traders have to choose in the money nifty option.

Example: If nifty future price is 9608 then buy nifty 9600 call option if you are bullish in market.

 

 

 

 

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *