Stock market
In India two stock market exchange working one is national stock exchange (nse) and Bombay stock exchange (bse),currently both stock exchange working on each broker but mostly doing trade in nse
On nse trading in equity and derivative segment during 9.15 am to 3.30 working
Also a pre open session start on 9 am till market opening indicate price only
Equity in cash section on shares and in derivative segment future and option trade
First we have to understand what is a future trading
Stock future
In stock future nse include some company for future trading in this company nse decide a fixed lot of quantity investor can book each lot for a settlement period ended ,at the end of settlement all future for series square off, generally settlement completed at the end of last week Thursday,
Investor get advantage in stock future with a margin price around 10 -15%of total value of (i.e. reliance industries `future of 250 share current price at 900,total value 225000)investor can book a future of reliance around 40-50 thousand rs.
Investor also forward his future before expiry to another settlement,
Stock option
In option investor get a strike price at some premium ,he get advantage of total stock future ,during settlement period he get full premium of (stockprice –strickprice)
Option has two divisions
- call option : a call option is indicate and benefit when stock price move on upward bias
- put option: a put option is indicate and benefit when stock price on downside move
investor can also sell these option too to get premium because as settlement near to expiry premium reduce and at end of expiry it goes nil if stock not cross a strike price but on sell side investor get small premium and a heavy risk factor occur
example: for better understand the option trade I make an example here
reliance industries ltd. Cmp.940rs. call for 960 rs have premium of 25 rs on first day of settlement if reliance trading near the price for 10 trading days then premium comedown near to 8-10 rs ,premium rise if reliance go upside to 960 within 3-4 trading days and more benefit if it goes up\ more then 960 for buying a call if reliance close 1020 on expiry buyer of 960 call get a 60 rs. As premium but if reliance close 960 then call buyer get nothing even he buy 960 call when reliance traded at 940 so basic in option is value of time ,same pattern happen in put option but it benefited for buyer if price goes downside, we can say reversal of call option
I suggest investor always study deeply before trading in option market because in option market time is money so please again first understand theory of option first .
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