LIVE STOCK MARKET
COACHING CLASS
with Siddhartha Chatterjee
batch of September
Class নোটস
2021 Share Koro
Understanding Derivatives
Futures= Mutton er moto bhari
Options= Chicken er moto halka
FACT :
80% of volumes in Derivatives are because of
Options. Futures contributes to 20% of
trading in Derivatives.
What Are Options ?
As the name suggests, Options Contracts
give you the OPTION to Buy/Sell any
stock on a particular date in the future.
Options Contracts give you the RIGHT but
not the OBLIGATION to Buy/Sell any stock
on a particular date in the future.
Types of Options
Index Option Stock Option
Categories of Options
Call Option Put Option
Call Option
In case you have a view that future price
will go up, you BUY Call option. If the future
price goes up, the call option premium
goes up. You make money by buying the
option and selling it at higher price
Put Option
You have a view that future price will go down,
you BUY Put option. If future price goes down,
put option premium goes up. You make money
by buying the option and selling it at higher price
There are 2 parties involved
in an option transaction :
[Link] Buyer
2. Option Seller
Transaction between an
Option Buyer & Seller
To BUY an option, Buyer A needs to pay
a premium - Call Option Premium
Seller B of the option gets the premium
Say premium is Rs.20, contract lot size
is 1000. For 1 contract Buyer A has to
pay : 1000 * Rs. 20 = 20,000
Seller B will get Rs.20,000
Depending on the contract price movement
this premium of Rs.20 will go up and down.
Resulting in profit or loss for either party.
SELLING/WRITING OPTIONS
If you buy options, someone
SELLS/WRITES them.
If Buyers have limited loss, Writers have
Limited Profit.
If Buyers have unlimited profit, Writers
have Unlimited Loss.
Write CALL OPTION if you think the stock
will go down and Write PUT OPTION if you
think the stock will go up.
Things to note :
Option premium can be traded
intraday.
Option contract for stocks expire on the
last Thursday of the month
Option contracts expiring every
Thursday of the week are only
available for Nifty and Bank Nifty.
Things to note :
Option premium BUYER has to pay the
premium and no charges. So the risk is up to
the value of the premium.
Option premium seller receives the premium
but has to pay the margin= margin applicable
for future contracts. Runs a huge risk with the
future price moving up as he is obligated to
offer the buyer, the contract in question.
Pricing Of Options
Option premium = intrinsic value + time value
so premium at the beginning of the
month has higher time value. With
passage of time this value detoriates.
terminologies used for Options
1. Lot Size
In derivatives, you cannot trade one
particular share.
There are specified lot sizes of all future &
option contracts. It varies from as low as
100 to as high as 1000.
Lot sizes are decided by the exchange and
available on the website-
[Link].
2. Contracts
In the derivatives market, contracts are
bought & Sold and NOT SHARES
Contracts are available for the current
month, Next month, Next to next month
Contracts are bought and sold by paying
initial margin
Contracts can be bought/Sold at any interval
or can be carried till the last Thursday of the
month
3. Rollover
Contracts of a particular month if
required to be continued to next month
has to be actually sold/bought and
enter next month with similar position
is called ROLLOVER.
4. Strike price
Options are available at various strike
prices.
Strike prices are available at intervals
depending on the underlying securities
as decided by the exchange
Strike price intervals depends on
underlying price and volatility
NIFTY strikes are available at a
difference of 50 points
Bank Nifty strikes are available at a
difference of 100 points
NIFTY WEEKLY EXPIRY SAME STRIKE PRICE CALL & PUT
At-the-money –
An option is at-the-money (ATM) if the strike
price is the same as the current price of the
underlying asset.
Example: If the future price is Rs.1000, then
call strike/Put strike at 1000 is at the money.
This is called
An option is in-the-money if a
CALL option's strike price is BELOW the
MARKET PRICE of the underlying asset or
that the strike price of a PUT option is
ABOVE the MARKET PRICE of the
underlying asset.
Example: Current price 1000, strike 980 call
is In the money.
Current price 1000, strike 1020 put is IN
THE MONEY
Out-of-the-money –
Out of the money (OTM) is a term used to
describe a call option with a strike price
that is higher than the market price of the
underlying asset, or a put option with a
strike price that is lower than the market
price of the underlying asset.
Example: Future price 1000, call of 1020
strike is out of the money.
Future price 1000, put of 980 strike is OUT
OF THE MONEY
HCL TECH FUT + CALL + PUT
NIFTY CALL OF DIFFERENT STRIKE
PRICES
HCL TECH FUT + CASH + CALL + PUT
Adani Port Trading Action
Trading Actions Price
One lot BUY (Feb'21) 550
One lot SELL at (June'21) 770
The difference in 4months 220
Trading Actions Price
600 strike CALL BUY at (Feb'21) 17
600 strike CALL SELL at (Feb expiry) 120
Difference 103
Future Profit Calculation
Points earned 220
Lot size 1250
Profits(Rs.) 275000
Options Profit Calculation
Points earned 103
Lot size 1250
Profits(Rs.) 128750
Ashok Leyland Trading Action
Trading Actions Price
130 trike CALL BUY at(June'21) 2
130 trike CALL SELL at(June'21) 14
The difference 12
Trading Actions Price
110 strike PUT BUY at (June'21) 1.5
110 strike PUT SELL at (June'21) 7
Difference 5.5
Future Profit Calculation
Points earned 12
Lot size 400
Profits(Rs.) 54000
Options Profit Calculation
Points earned 5.5
Lot size 4500
Profits(Rs.) 24750
Aj ei porjonto!
2021 Share Koro