Watch this video to learn option strategies, in this video I have tried to explain the very basic option strategy which is Vertical Spreads. In this video you will learn the below given terms:
1. what are vertical spreads?
2.Bull vertical spreads
3. Bear vertical spreads
4.Bull call spread or vertical debit spread
5. Bull put spread or vertical credit spread
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NSE pathshala has been closed and it is not known whether nse will relaunch it or not...for learning purpose try to use excel, yes i know it is somewhat tedious/irritating but at the same time one can learn easily.
Hello. I have a question on use of bull call strategy. Let me put figures here to put my points across. Today, I engaged into Bull Call spread when Nifty was at 11412.45. I bought 150 of 11500CE at 69.15 and simultaneously shorted 150 of 11300CE at 186.60. Nifty has risen to 11435.35. 11500CE has appreciated to 78. Thus, profit of 1327.50. 11300CE too appreciated and price is at 202.95. Thus, loss of 2452.50. Therefore, net loss of 1125. 11300CE is an ITM option whose Delta i.e. sensitivity to change in Nifty is always going to be more than 11500CE which is an OTM option. In conclusion, I have found though Nifty went up from 11412.45 to 11435.35, I have ended up incurring net loss of 1125. Where did I commit mistake?
Its very simple to calculate, 1st don't get confused by long or short options, just remind the below formula:
before discussing formula, keep in mind some points:
1. options premium=time value+intrinsic value
2. intrinsic value (call or put) can never be -ve but can be zero (if the answer of difference comes -ve then it should be read as zero)
3. if intrinsic value comes as +ve figure then the respective strike is termed as ITM.
4.if the answer comes as -ve then the premium consists of time value only which is considered OTM.
5. for call option and for put option the formula should be in same manner as stated below..
now, the formula:
for call option
Intrinsic value= Stock's cmp - Strike price
for Put option
Intrinsic value= Strike price - Stock's cmp
to find out time value (for call & put formula will remain same)
time value=Option premium - intrinsic value
note: the same thing i have clearly explained in detail in my video "basics of option trading" link already shared with you.
Thanks for providing me exact time from the video.
Now, 1st lets understand that in case of call option all the strike prices will be termed as ITM if share's spot price is higher than strike price , say call strike price 105 and share's price is 110.
And in case of Put all the strike prices will be termed as ITM if share's spot price is below the strike price, say put strike price 105 and share's price is 100.
Now, I hope all of your doubts would have been cleared.
For more understanding ITM,ATM and OTM pls watch my video on Basics of option trading.https://www.youtube.com/playlist?list=PLwVeAxRW4rGReVRjU4UQ0HOIrFQSkvKHL
Mann Singh Sir thanks for your kind and prompt response. It's at 25:41 in selling call option that -12 isn't it OTM. And same thing while selling Put option at 36:43 we are ITM while it's mentioned OTM.
U have not taken into account the MARGIN taken while selling the Calls or Puts. it is Quite high. SO ROE is less. ALso, if a newbie do this he will LOOSE. Actually, one can make profit using these strategies if ONE starts with around 1Lacs + 50K (provide the cover for margins) and with Some experience in Option MArket then only one can make decent profits.
when we know that with decrease in time premium vale of Rs 5 will come down , why should not we wait and buy the call at that time when premium decrease, and then at that time do out of the money call premium value will increase?
hi there, what's the normal spread in stock and index options. i know it depends on volatility but someone told me that the spread could to as high as 5%. Is it true ? I'm new to trading and it will be appreciated if you can tell me how does the bid offer spread works for options. Is the difference too high ? Is it possible to do day trading in options. Many thanks
This was great, I been tryin to find out about "beginners options trading" for a while now, and I think this has helped. Have you heard people talk about - Jenameron Penny Smackdown - (do a search on google ) ? Ive heard some great things about it and my friend got excellent results with it.
sir i am new trader showing your video i search bulk deal company FII or DII or Mutual Fund in [sebi.gov.in/fii] this site but they demand a user id an password then login but what i give password? please help me.
Stock Options MARUTI 25JAN2017 CE 5,800.00 21.10 23.05 36.90 0.55 2.00 14,002 1,22,141.27 323.87 5825.00
Stock Options YESBANK 25JAN2017 CE 1,400.00 1.55 1.85 5.80 0.75 5.45 8,651 84,946.33 166.53 1408.85
when I am posting this the market on 25th Jan is closed and so the Jan options are expired. Above are two examples of closing rates of Maruti and Yes bank. In Maruti the closing share price is 5825 and 5800 CE closed at 2/- which should be 25. same in yes bank also. 1408.85 is last share price and 5.45 is last 1400 CE. it should be 8.85. plz explain.
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