Help Me Futures & Options///

I am trading in equity for more than 4 years...

I don't know much about Futures & Options ... People earn much from Futures & Options...
Now i am interested in knowing what Futures & Options is...

I have a bit of knowledge about futures but don't know Options.

Is it true that earning can be more while trading with Futures & Options than trading in equity?

One can earn unlimited profit by option trading. The downside is one can also loss all money by trading in option. If one is confident that a particular stock is bullish and appricate within a month contract peroid one can buy CA at a particular strike rate. Take for examble MTNL is now looking bullish. On 1 June, June Future low was 153 high was 167 and close price was 165. 28JUN 160 CA low=3.25, high=11.00, close=9.60. As 160CA is high vol contract (727) I am citing this as examble. I f you enter in future segement then you have to pay aleast 20% of the margin. But in Option trading you have to pay a samall amount. Here for examble if you bought MTNL 28JUN 160 CA at Re/ 4 then you have to pay only Re/6400+100(brokerage) and the gain if you close at Re/ 8 is Re/ 6400 a 100% gain within a day if not a month.
Another important point is that we know the exact amount that we may loss in Option trading as unlike in future trading. The downside is in Future trading one can carry forward to next month as it is not possible in OPtion trading.
Then main points to keep in mind is
1. The counter should be bullish or bearish ( if bullish go for CALL OPTION and Bearish PUT OPTION)
2. Buy contracts with high volume.
3. Sometimes it is advisable to BUY PUT OPTION of some sesitive stocks which may crash on minor correction or which trades life time high for a long period of time. At present condition Reliance, Bharathitele, Sail SBIN and Nifty are excellent counters to buy PUTs at low levels and if market correct these counters will correct like a elevator goes down.

Options are quite risky in nature and that is why options are not popular. The reasons are the following.
Unlike futures options tend to lose value as the time of the completion of the contract approaches.Options do not regain value as quickly as futures.which means that the premium depends on many factors .Usually investors lose lot of money if the stock is not having momentum on either side .temporary movements may see the futures regain value at some point of the time but options do not regain quickly as they lose once the downtrend starts.It is better to trade in stocks which have small lots and are popular like icici.
futures are relatively safe but you should have sufficent fund ready to meet temporary losses to meet margin requirements.If you do not have adequate finances better stay away from futures and trade in cash since at least you will be left with shares in case of sudden falls.In case of futres and especilly options you lose cash once for all after the expiry of contract.roll over in options is difficult as trading is not that brisk,sometimes there wont be buyers of your contracts also.

Dear friends: First i wish all the best to this site which enlightens the basic principles of stock market. Regarding future, if i purchase a june future, is it valid upto June end. Can i quit at any time if i make profit. How long one can renew futures maximum. Kindly explain more about futures. Thanks a lot. Sundaram

One of the important purpose of F&O was liquidity and saftey against investment. So it goes without saying that at any time you may exit before expiry time in futures. If you have profit and can book profit or if you want to exit on bearish market with minimum loss immediately. Now you can buy/sell JUNE JULY and AUGUEST future. normally volume will be in the current month. Beacause of that liqitity will be more.

Hedging is easy by way of Option trading. When market was alltime high buying is risky. After buying to minimise risk it is advisable to buy a put. When market crash/ correct loss will be minimum.

One of my friend told me that to victimise an enemy introduce him to Future trading and he will get punished.

So it is advisable to trade F&O with caution and money management should be efficient.

In my personal experience it is advisable to hold 55% of margin money of a particular stock (against broker margin 0f around 20%)and if one can find around 10% prifit it is advisble to book profit and enter again at Support level 2. Also it is advisable to trade on familiar stocks of which fundamental and technical aspects are known to you.

At present scenario I advice Auto sector particularly TVSMOTOR, TATAMOTOR, ESCORTS, ASHOK LAEYLAND, M&M, Reality sector(due to DLF IPO) BATAINDIA, BOMBAYDYING, GESCOCORP, Hospitality sector, IT sector particularly SATYAM WIPRO TCS and other momentum counters like IFCI, IDBI, IDFC, MTNL, TVSMOTOR, TTML, SKUMARSYNF, NTPC and to some extent SCI NEYVELI TATASTEEL HINDALCO and UTIBANK.

Books about F&O trading is available. One should buy and read.

Hello
If you are interested in learning about options trading and Investing have alook at www.cashforlifesystem.com

Ash

dear ash thank you


i download and begin to read casfor life
anyother important materials like this please post here

thanking you

Hello Punnu, here's my two paisa worth about options.
I started trading in options only recently although I kinda knew about it. Here's some important rules of thumb I've learned:

(1) Option is a contract to buy (Call when you think Long) or sell (Put when you think Short) the underlying at a particular Strike price. The lot size (and expiry date) is the same as the Futures contract. e.g. RPL 170 Call could be bought at Rs. 10 when RPL (spot) is being quoted at 165. You expect RPL to cross 170 before expiry. The RPL lot size is 1675, and margin for Futures contract is Rs. 60,000 (aprx). You can buy/sell at any time before expiry.** To buy one Futures contract you'd need to set aside margin of Rs. 60,000. To buy one 170 Call you'd need to pay just 1675x10=16,750. Since RPL's current price is Rs. 165, ideally 170 Call should cost the difference (170-165=) Rs. 5 but since most people are betting on that trend they end up paying a premium of (10-5=) Rs. 5. But then you pay a little premium also for a Futures contract. If RPL crosses 170, the option is called "in the money" and say, is quoted at Rs. 17. You can now sell it and pocket your profit of (17-10=7) multiplied by the lot size of 1675 giving you 1675x7=....... Conversely, if RPL goes down to 160 levels, your option may be quoted at Rs. 3 in which case you'll incurred a loss of (10-3=7) times the lot size. Vice versa for the Puts. This is just the theory.

(2) Option writing is selling a Call or a Put which is not advisable for us (unless of course you know what you're doing) as it requires the same margin as the Futures contract. If you think Short, just buy a Put instead of selling a Call. In the above example, you could buy 160 Put for RPL, and hope it goes down from CMP of 165.

(3) Actually very few stocks have active options. Currently the only stock options really active are for RELIANCE and RPL. Which means that others are "illiquid" and best to stay away from. In fact, it is really best to stay away from individual stock options. Better to trade in the top five Nifty options. You can find info on this at NSE website (nseindia.com)

(4) Finally, brokerage for Option trading is quite high. For a Nifty option, this works out to almost 5 point spread on a buy-sell transaction. In other words, you don't make money until your Option price advanes by at least Rs. 5. You may want to check your contracts and confirm with your brokers. NSE has imposed certain guidelines by which they have to operate.

(5) Hedging with Futures and Options requires some more understanding of Risk Management about which I am rather ignorant. Maybe other more knowledgeable traders can help us out here.

Hope this helps. I am keen to hear from traders who are more adept at this and do it on a regular basis and make money.
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** If you don't settle your options/futures contract before the market stops on the expiry date, NSE will settle it for you at the closing price of that day. Do it only if you are already in the money and the price keeps going up till the end to extract max juice out of it.

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Paresh
If people put you on the SPOT, ask about FUTURE, and give you no OPTION;
just tell'em "the LONG & SHORT of it is How to Make Money!"
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Thanks you for such a valuable comments...

Today I had a spat with my Indiabulls RM over the brokerage issue. They charge the brokerage on options as 2.5% per lot OR 100 per lot.. whichever higher which eats up most of the profits...

Can you suggest any broker suitable for option trading...?

Thanx....

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What's considered as enough money... Just a lil' bit more....
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“In this market, the person who makes money will be he who knows when to do nothing."

Unfortunately, what they are charging is as per NSE stipulated charges. All brokers would charge the same amount. Does anyone have any experience with Reliance Money?

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Paresh
If people put you on the SPOT, ask about FUTURE, and give you no OPTION;
just tell'em "the LONG & SHORT of it is How to Make Money!"
To view links or images in signatures your post count must be 2 or greater. You currently have 0 posts.