Basics of Option Trading for Option Traders in India
Options are the share market entities that are traded on the stock exchange. There are various financial segments in the share market, derivative is also one of these segments. Derivatives are essentially financial contracts that derive their value from an underlying entity or asset. The underlying asset can be any of the stocks, commodities, currencies, indices, exchange rates, or even interest rates. With derivatives, option trader make profits by predicting the future price movement of the underlying asset.
The Basic principle behind entering into derivative contracts is to earn profits by speculating on the value of the underlying asset in the future. Options trading is one of the types of derivatives. In this article, we are going to see how option trading in India happens. Also will discuss some option trading strategies. Once you get familiar we will further be going to tell you about option trading software India and various option trading platform India.
Option Trading Strategies for Option Trading in India
Here we have explained some strategies. These strategies are also used by option trader for option trading in India as well.
1. Covered Call
The covered call option strategy is very popular among long-term stock investors because it can reduce the loss potential on the shares. It can create a stream of income on those shares.
2. Married Put
A Married put which is one of the option trading strategies is also called a protective put. It is when you combine a long put option against at least a hundred shares of stock in an attempt to completely reduce or eliminate the risk of a long stock position below a certain price.
3. Bull Call Spread
The bull call spread option strategy is a strategy that profits when the stock price increases and it is one of the four vertical spread option strategies.
4. Bear Put Spread
The bear put spread option strategy is a bearish strategy that profits when the Stock price decreases but has a limited loss potential when the stock price increases.
5. Protective Collar
The collar is the combination of a long stock position, a short call position, and a long Put position.
6. Long Straddle
The long straddle strategy profits when the stock price makes a significant movement in either direction or when implied volatility increases. Buying straddles or sometimes referred to as a long straddle is among the option trading strategies constructed by buying a call and put option at the same strike price and in the same expiration cycle.
7.Long Strangle
The long strangle is an options trading strategy that profits from a large movement in the stock price in either direction. If the stock price moves significantly to the upside or downside the long strangle will be a good strategy.
8. Butterfly Spread
Butterfly spread can be constructed with either all calls or all puts and depending on which option type you use.
9. Iron Condor
The iron Condor can be market neutral meaning that you do not have to pick a specific stock price movement in order.
10. Iron Butterfly
The long iron butterfly is also a popular strategy amongst various option trading strategies essentially a way to buy a straddle at a reduced cost but with that comes less profit potential as well.
So as far now you have got familiar with the teen option trading strategies. By using these option trading strategies in India you can achieve excellent hedging and maximize the profit of your portfolio
Things to Know about Strategies for Option Trading in India
FAQs
Best Options Trading Apps and Platforms 2024
- Upstox. Upstox Pro, the best stock trading app, is our first pick because of its fast execution, advanced tools, and lowest brokerage fees for options trading. ...
- Paytm Money. ...
- Zerodha Kite. ...
- 5paisa. ...
- Angel One.
Which analysis is best for option trading? ›
Which indicator is best for option trading? Several indicators are useful in options trading, including the Automatic Demand and Supply Indicator, volume profile, RSI, Ichimoku Cloud, and Fibonacci retracement, each of which provides distinct insights into market dynamics and potential trading opportunities.
What platform do professional traders use in India? ›
People praise several Indian stock trading platforms, like Paytm Money, Zerodha, Angle Broking, Groww, Upstox, etc., for their responsive customer service.
How can I practice options trading in India? ›
Sensibull is a feature-rich options trading app that provides a paper trading feature to users. It allows beginners to practice trading options without the risk of real money. Sensibull offers advanced options strategies, a real-time options chain, and a virtual portfolio to track performance.
Who is the number 1 option trader in India? ›
Which platform is better for F&O trading? ›
Best Options Trading Broker for beginners – Zerodha
Beginners can also learn on options trading on its Varsity educational platform. Upstox, ProStocks, and Angel One are other recommended brokers for you to trade in F&O segment.
Which technique is best for option trading? ›
Bullish Option Trading Strategies
- 1) Bull Call Spread.
- 2) Bull Put Spread.
- 3) Bull Call Ratio Backspread.
- 4) Synthetic Call.
- 5) Bear Call Spread.
- 6) Bear Put Spread.
- 7) Strip.
- 8) Synthetic Put.
How to analyse F&O? ›
Top Tools for F&O Trading Analysis
- Market Trend Analysis. One critical aspect of F&O trading is understanding market trends. ...
- Volatility Analysis. ...
- Options Pricing Models. ...
- Technical Analysis. ...
- Sentiment Analysis. ...
- Risk Management Tools.
Which is the most accurate indicator for option trading? ›
Relative Strength Index (RSI)
Which is the biggest trading platform in India? ›
A real list of top stock brokers in India 2024 by number of active clients in 2024. Groww is the top stock broker among all brokers in India. Groww is followed by Zerodha, Angel One, Upstox, and ICICIdirect.
Top 10 Traders in India
Position | Top Traders in India |
---|
1 | Premji and Associates |
2 | Radhakrishnan Damani |
3 | Rakesh Jhunjhunwala |
4 | Raamdeo Agrawal |
6 more rowsJul 19, 2024
What software do traders use? ›
MetaTrader 4 (MT4) is the best stock market software for automated trading. Launched in 2005, MT4 is used by millions of traders worldwide. The software is supported by hundreds of online brokers. Users simply need to log into MT4 with their brokerage credentials.
Which tool is best for options trading in India? ›
Stolo is one of the best apps for option chain in India that provides users with various tools. Advanced analytics, real-time option chain data, and options strategies are some of its useful tools.
How can I master options trading in India? ›
How are Trade Options Using Four Easy Steps?
- Step 1- Open An Options Trading Account. To start trading in options is not the endgame. ...
- Step 2- Pick The Options To Buy Or Sell. ...
- Step 3- Predict The Options Strike Price. ...
- Step 4- Analyse The Time Frame Of The Option.
Can I do options trading in USA from India? ›
Yes, you can trade options in US or any other foreign country (legally permitted) from India. However, you would need an account with a foreign broker, registered in the US, to trade derivatives.
Who is best for option trading? ›
Best Options Trading Platforms of 2024
- Best Overall: tastytrade.
- Best for Beginner Options Traders: Charles Schwab.
- Best for Advanced Traders: Interactive Brokers.
- Best for Mobile Options Trading: Interactive Brokers.
- Best for Low-Cost Options Trading: Webull.
- Best for Casual Options Traders: E*TRADE.
Who is the best mentor for options trading in India? ›
Abhishek Jha, in partnership with Niraj Mittal, has established Trendy Traders Academy as the go-to destination for individuals looking to enhance their trading skills. Their institute is renowned for delivering high-quality education and training to aspiring traders.
Can I buy US options from India? ›
Yes, Indians can invest in the US stock market. There is more than one way to buy and hold US stocks in your portfolio. Direct equities, ETFs, and mutual funds are just one of the few popular options. You can invest in US stocks in two ways from India – indirect and direct.
How can I trade options in India? ›
How are Trade Options Using Four Easy Steps?
- Step 1- Open An Options Trading Account. To start trading in options is not the endgame. ...
- Step 2- Pick The Options To Buy Or Sell. ...
- Step 3- Predict The Options Strike Price. ...
- Step 4- Analyse The Time Frame Of The Option.