Nifty future is having around 6lacs value and it needs 10-20% margin only(may be 50to 80 thousands).
If some one don’t even have that much money.There are other instrument available with minimum capital required & limited loss only.
It is not possible to have uncontrolled huge losses in OPTIONS like futures.
If you think there is a possibility of 100pt upside in nifty future and you don’t have margin to trade in future or you don’t want to take such a big risk.
You can BUY CALL (nifty) instead of nifty future buying.
There are different strike prices available.Suppose nifty is running 7900 now.
So 7900/8000/8100/8200strike price available there,which can have decreasing premium (actual price)100/80/60/40.
Strike price is NOT price.
PREMIUM is the price what you pay .If lot size of nifty is 75,
Then price for above mentioned calls will be Rs 100*75=7500/80*75=6000/60*75=4500/40*75=3000.
Margin trading is not allowed in OPTIONS. One should have complete amount in our trading account to buy any options.
PUTS are more traded in downward direction,
So 7900/7800/7700/7600 strike price will have decreasing premium100/80/60/40.
Then price for above mentioned PUTS will be Rs 100*75=7500/80*75=6000/60*75=4500/40*75=3000.
There are three types of OPTIONS on basis of strike price.
ATM –At the MONEY call/put
If nifty is running 7900,then 7900 call & put are AT the money(ATM call/put)
In the money-ITM call/PUT
If nifty is 7900,then it has passed already from 7800/7700/7600 in case of CALLS.
All these calls are In the money calls.
If nifty is 7900,then it has passed already from 8000/8100/8200 in case of PUTS.
All these PUTS are in the money PUTS.
You can see OPTION CHAIN from right upper corner of any page on NSEindia.com about nifty/bank nifty or any stock.
Left upper part is in very light yellow shade showing in the money calls and
Right lower part is showing in the money puts.
Option chain doesn’t show open/high/low & close of any particular call/put(option).
You should go to back page and then see GET derivative quote from the same right upper corner of detail page about any stock.
OTM call/put (Out of money)
These calls are yet to come. Suppose reliance industries is at900.
Then for CALLS 920/940/960/980 strike prices are yet to come.
For PUTS880/860/840/820 strike prices are yet to come.
Option positional trade are safe in the beginning of month.
It is risky to buy call/put in third & fourth(expiry)week.
However short selling of call/put may be better in 3rd/4rth week.
Option price is made up of intrinsic value+ time value.
Time value of an option is reducing gradually day by day near expiry. So all out of money call & put may reduce to 0.05premium on expiry day due to time decay.
See equity derivative in live market-live watch of nseindia.com.
You will see nifty futures & nifty options on first page with top turnover.
In left side,there is view box,
Which will show top20stock futures & top20stock options.
See monthly top gainer &loser of nifty/nigty next50 & nifty midcap.
Keep daily records of these 3gainers/3losers/nifty/banknifty
At the money & most active call/puts.
Oberve the changing behavior with nifty & sector movement.