abhishek21

[abhishek21]

Open Interest and Price Analysis

Open Interest is applicable to both futures and options. Open Interest data is One of the key aspects that analysts and traders monitor while monitoring the market. Open Interest is the number of open options contracts available to trade. i.e. OI refers to all positions that are still open. So if any fresh trade is executed, the Open Interest increases and if any trade is closed, the Open Interest decreases. Open Interest indicates the direction in which a contract is trending. The number of Open Interests keeps changing throughout the trading hours as the traders buy and sell contracts.

When a trader makes afresh entry in the F&O market, Open Interest goes up

When an existing position holder squares off with the entry of a new trader, open interest remains unchanged

When two existing position holders square off their positions we see open interest go down

Long story short, if the Open Interest of contract keeps expanding as new participants keep initiating fresh positions in the contract.

refer our detailed blog to learn more options strategy

[abhishek21]

Types of Participants in Derivatives Market

Derivatives are a very important financial instrument of the financial derivatives market as they help investors to hedge their risks, enable price discovery, and improve the liquidity of the underlying asset. There are different types of the derivatives market for derivative trading, namely; Options Derivatives, Future Derivatives, Index Derivatives. These financial derivatives are the financial contracts whose value is derived from their respective underlying asset. Further, there are various types of individuals with various investment goals to trade in the market, called Market Participants.

Market Participants in the derivative market take positions to earn riskless profits by taking two different positions in the same or different contracts.

Each type of individual will have an objective to participate in the derivative market. Derivatives market participants can be divided into the following categories based on their trading motives:

refer our detailed blog to learn more options strategy

[abhishek21]

How to do calendar call spread trading? know in hindi

आप कवर कॉल ऑप्शन रणनीति (Covered Call Option Strategy) से परिचित हो सकते हैं जिसमें निवेशक सिर्फ उन ईटीएफ (ETFs) या स्टॉक्स (Stocks) के लिए कॉल ऑप्शंस (Call Options) की एकत्रित बिक्री कर सकता है जिसका वह मालिक होता है। लेकिन कैलेंडर स्प्रेड (Calendar Spread) आपको अंडरलाइंग एसेट को ख़रीदे बिना वही काम करने की अनुमति देता है। इसलिए आय उत्पन्न करने की उम्मीद में आपकी कम रकम जोखिम में होती है। कैलेंडर स्प्रेड (Calendar Spread) को निकट-अवधि के ऑप्शन में होने वाले समय- क्षय (Options Time Decay) से लाभ कमाने के लिए डिज़ाइन किया गया है। यदि अंतर्निहित (Underlying) मौजूदा कीमत से किसी भी दिशा में दूर चला जाता है तो कॉल स्प्रेड मूल्य (Call Spread Value) में गिरावट शुरू हो जाती है। इस ब्लॉग में, हमने इस बारे में विवरण दिया हैं।

इस ब्लॉग में आप आगे पढ़ेंगे,

कैलेंडर स्प्रेड क्या है? (What Is Calendar Spread In Hindi?)

कैलेंडर कॉल स्प्रेड क्या है? (What Is A Calendar Call Spread? In Hindi)

कैलेंडर कॉल स्प्रेड कैल���ुलेटर (Calendar Call Spread Calculator)

ट्रेडिंग कैलेंडर कॉल स्प्रेड (Trading Calendar Call Spread)

कैलेंडर कॉल स्प्रेड ऑप्शन रणनीति। (Calendar Call Spread Options Strategy)

refer our detailed blog to learn more options strategy

[abhishek21]

The Impact of Major Events on Markets

If you are a budding and a keen investor, you need to know what parameters your analysis and research should be based upon. Before deciding on your next trade, one needs to count all the company-related and external factors. It gives a better idea of the market movements. It helps an investor know all events that can influence the price and its impact on the market movements.

The External Major events that can affect the market are as below:

Monetary Policy

The monetary policy of any country can affect market prices significantly. The monetary policy states the use of financial instruments under the control of RBI to standardize the availability of credit, interest rates, money supply to reach the ultimate objective of economic policy.

The three objectives of the monetary policy of the Reserve Bank of India (RBI):

(1) Price Stability or Control of Inflation

(2) Economic Growth

(3) Exchange Rate Stability.

refer our detailed blog to learn more options strategy

[abhishek21]

Understanding Index and its Application

Index is a statistical indicator that measures changes in the economy. In Financial markets, an index means a portfolio of securities representing a particular market or a portion of a market. Each Index has its own calculation methodology and usually is expressed in terms of a change from a base value. The base value might be as recent as the previous day or many years in the past. Thus, the percentage change is more important than the actual numeric value. Financial indices are created to measure price movement of stocks, bonds, T-bills and other type of financial securities. More specifically, a stock index is created to provide market participants with the information regarding average share price movement in the market. Broad indices are expected to capture the overall behaviour of equity market and need to represent the return obtained by typical portfolios in the country. A stock index is an indicator of the performance of overall market or a particular sector.

There are two main market indices in India. The S&P BSE Sensex representing the Bombay stock exchange and CNX Nifty representing the National Stock exchange.

refer our detailed blog to learn more options strategy

[abhishek21]

Important things futures and options traders should keep in mind

Futures and Options are a major type of stock derivative. Trading in derivatives also allow you to hedge or speculate to protect yourself against the unexpected movements in the market. This can be done with the help of the hundreds of possible Option strategies available to a trader. Consequently, the traders are also have an advantage to use various metrics to measure the theoretical exposure of an option or option strategy to the various risks. Futures and options have a wide range of advantages and drawbacks.

refer our detailed blog to learn more options strategy

[abhishek21]

How to select the right Strike Price in Options Trading?

Being in the stock market involves trading and investing in securities which means you have to know about the buying or selling of options. Buying and selling of options introduces you to the concept of Strike Price where selecting the strike price is the most important decision to make.

A strike price of an option is the set price at which a derivative contract can be bought or sold while exercising the contract. As an option approaches expiry, there are three choices to be made: sell the option, exercise the option, or let the expiration expire. Hence, strike price is also known as exercise price. For call options, the strike price is the price at which the security can be bought by the option holder; and for put options, the strike price is the price at which the security can be sold by the seller.

refer our detailed blog to learn more options strategy

[abhishek21]

The Important Role played by Traders in the Market

Traders or Investors?

This is a basic but a confusing aspect. Most of the people use these words conversely without realizing the important differences among the two, though both these concepts differ on a vast scale. Traders are an integral part of the markets, as without the active participation of traders, markets cannot function efficiently. Traders participate in the same market as investors, but their roles, objectives, strategies and method of approaching financial markets differ. Traders are also market participants who purchase shares in a company based on the market rather than the company's fundamentals.

refer our detailed blog to learn more options strategy

[abhishek21]

Everything you need to know about Future shorting

You must be wondering if short selling can also be carried out in futures. The biggest advantage of trading in futures is that you can short-sell without having the stock, and you can carry forward your position.

Shorting is a concept that cannot be easily implemented by all, because it is not an everyday normal transaction. Short Selling lets an investor sell a security without having to own it and then buy it at a later date. Thus, shorting is an exact opposite concept of the traditional financial transaction.

You must now wonder that, “Why would an investor sell a security even before buying it?”

Any investor purchases a security hoping that its the prices will rise in the future. And, sells it later to make profit out of it. An investor would usually sell security first if they expect that the price of it will fall down in the days to come. When an investor analyses that the price of a security will increase, i.e. move in an upwards direction, he is ‘long’ on that stock. On the other hand, if the investor analyses a fall in the prices of the security, he is ‘short’ on such stock.

refer our detailed blog to learn more options strategy

[abhishek21]

Best Time Frame for Intraday Trading

To trade intra-day, you have to make quick decisions and execute your orders with the speed. You have to control the fascination of more money and not over-trade the stock market. When you do intra-day trading, you can’t trade with only a single time-frame chart. Technical experts look at a combination of charts of the same stock to take required trading decisions. Each chart is in a diverse time frame and provides the entire picture of the stock trends and movement.

For long-term intra-day traders finding the best time frame is very beneficial. Experienced intra-day traders can get a huge loss of their money if they trade outside of the best time frame for intra-day trading. This begs the question that what is the best time frame for intra-day trading?

refer our detailed blog to learn more options strategy

[abhishek21]

Derivative Indicators

A derivative is a financial security that has a value that based upon or derived from, an underlying asset or group of assets. The most common underlying assets for derivatives are stocks, bonds, commodities, currencies, interest rates, and market indexes.

In practice, while trading in derivatives there are quite a few indicators that we can look at and automate to produce trading signals when the rules we specify are triggered. Some indicators are more suited for trending markets while other indicators are oriented towards consolidating markets. Derivative indicators help you understand the direction in which the market and individual stocks are likely to move in the short term.

refer our detailed blog to learn more options strategy

[abhishek21]

Trading v/s Investing: What is the difference?

Many beginners are often caught in this dilemma of what should their method of attempting profits in the financial market be based upon; trading or investing? Both the investors and traders generate profit by market participation. As the name suggests, investors invest their money for some years, decades, or for an even longer period and gradually build wealth over a period of time.

The original and conventional meaning of trader was "one engaged in commerce," meaning someone who makes a living by buying things and selling them at a profit. Trading is an approach of holding stocks that encourages holding stocks for a short period of time, a day, or a maximum of a week. A trader is interested to hold stocks only till the short-term trade shows high performance, and profit from its highs or lows, whereas, investing is an approach that works on buy and holds a principle. If you're comfortable with the risks, trading with a portion of your money can be enjoyable and could lead to greater profits than investing.

refer our detailed blog to learn more options strategy

[abhishek21]

Expiry in Derivatives

As the name suggests, the Expiry date is the date on which a particular contract (usually a derivative contract) expiry. Every derivative contract based on an underlying security such as a stock, commodity, or currency has an expiry date, i.e. it exists only for a specified period.

In the Indian Stock Market, the expiry date of Index and Stock derivative contracts is on the last Thursday of every month, and in case that Thursday is a holiday, it will be one day earlier on Wednesday.

Expiry in Derivatives

Expiry is a term used for derivatives - future and options settlements. Normal traders and delivery holders don’t need to worry too much unless they hold some highly volatile stock. Traders review their derivatives holdings a few days or a week before expiry to check if it is rewarding or not. On or before this day, investors will have already decided what to do with their expiring position. Generally, these traders frequently hold stock in both the secondary stock and derivatives market.

refer our detailed blog to learn more options strategy

[abhishek21]

Option Trading

Option - Definition & Types

An option is a contract that is linked to an underlying asset. For example stock or another security. Options contracts are good for a set time period, which could be as short as a day or as long as a couple of years.

Call option

A Call Option gives you the right to buy an underlying security at a designated price within a certain time period. The price you pay is called the strike price. The end date for exercising a call option is called the expiry date.

refer our detailed blog to learn more options strategy

[abhishek21]

MONEY MARKET

Every modern economy is based on a sound financial system that helps in production, capital, and economic growth by encouraging saving habits, mobilizing savings from households and other segments, and allocating savings into productive usage such as trade, commerce, manufacture, etc. The financial system covers both credit and cash transactions. Thus, a financial system is a set of institutional arrangements through which financial surpluses are mobilized from the units generating surplus income and transferring them to the others in need of them. Money Market is a very important segment of this financial system.

What is Money Market?

Money Market refers to the market where the borrowers and lenders exchange short-term funds to solve their liquidity needs. Money Market instruments are generally financial claims that have low default risk, maturities under one year, and high marketability. Short-term funds up to one year and financial assets that are close substitutes for money are dealt in the money market. In India, this market is regulated by the Reserve bank of India (RBI) or SEBI (Securities Exchange Board of India).

refer our detailed blog to learn more options strategy

[abhishek21]

How to perform Option Chain Analysis in Options Trading?

Option chain analysis is very popular among stock traders because it provides data that can reveal market expectations be it support and resistance, directional bias, and expected volatility. And these are all very useful inputs to form trading strategies but one should know how to keep it simple because we have hundreds of contracts getting traded in NSE and it is very difficult to review each and every contract. If you attempt to do so you will end up wasting time. If you are a beginner in options trading, then this blog is exclusive for you.

Option Chain Data Analysis

Option chain analysis or Option chain data analysis means reading and interpreting (studying) the option chain. It is very important for you to understand how to read an option chain . Option chain gives you all the data you want while you are trading in options. Many traders lose money in options trading because they don't know exactly how to analyze or understand the option chain. An option chain is a very useful tool for options traders and cash market traders. To learn option chain analysis let us first understand what is option chain?

refer our detailed blog to learn more options strategy

[abhishek21]

Option chain

Option chain contains details like strike prices, all listed puts, calls, their expiration, volume, and pricing information for a single primary asset within a given maturity period. An options chain provides detailed information about quote and price and it is different from options series or cycle, which indicates the available strike prices or expiration dates. Following is the window of option chain on the NSE website. There is three options chain available on the NSE website that is NIFTY, FINNIFTY, BANKNIFTY.

NIFTY

The National Stock Exchange Nifty (NIFTY) is the stock market index of the National Stock Exchange (NSE). Also known as NIFTY 50 and CNX Nifty, it consists of 50 stocks that are actively traded on NSE.

refer our detailed blog to learn more options strategy