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Nifty Options Trading

Like in Nifty futures trading, nifty options trading too has the same timeline for expiry. The expiry date for all the derivative products of one security remains same. Trading style of Nifty call put options is totally different to nifty equity or nifty futures. Different strike prices are available from far before strike price to far after strike price. For instance if nifty is trading at 5500, traders can avail nifty strike prices from around 3500 to 7000 or even more. so the right to exercise is high in nifty options trading. It would be obvious to say that key lies in predicting the market movement when it comes to option trading.

The lot size is same as nifty futures, 50 shares per lot and the premium traders select to trade decided their investment to buy an option lot. For example, if the premium selected is around 100, the investment required to buy 1 lot of nifty option is around 5000 (100 x 50), as the lot size remains same with 50 shares, irrespective of nifty call option or nifty put option. But this is not the case, when selling a nifty option. The margin that is required for selling is the same amount that is required to buy nifty future 1 lot. This is because when buying a nifty option, the loss is limited and profit is unlimited whereas in case of selling a nifty option, the loss is unlimited and the profit is limited. This is the reason traders need to maintain mark to mark margin in case of loss. At the end of the month, after squaring off the position and calculating the profit/loss, the remaining amount will be credited in to the traders trading account.

Summary for Nifty Options Trading:

Nifty options trading consists of nifty calls and nifty puts
All option scrips has the same expiry as of nifty futures
Lot size of nifty options is 50 shares per lot
Different strike prices are available for nifty options trading based on the current price
Profits/losses are calculated by multiplying lot size (no. of shares ) and points gained/lost.

Posted By: Rajeev Srivastav                 Posted on: 2016-07-11 16:20:38                 Updated on: 2016-07-11 16:20:38