Option Strategy – Zerodha Trader
Traders,
Trading in Futures and Options was introduced in the early 2000’s on the NSE. Futures was more popular among the two until the market meltdown in 2008 after which the popularity of options has increased tremendously, much more than futures today. Following are the reasons which probably attributed to the increase in popularity of options on the NSE:
1. For holding a future position, you would need NSE stipulated margins which would work upwards of Rs 25000 based on what future contract you are trading whereas in options a trader with even Rs 100 in his account could take some kind of an option position.
2. Future positions have unlimited risk, whereas in option buying the risk is limited to the premium you are paying.
3. STT(Security Transaction Tax charged by the government) for Future is charged on the contract value whereas for options it is charged on the option premium. What this means is if you buy and sell 1 lot of nifty futures at 6000, the turnover generated is Rs 6lks( 3lks+3lks). STT is 0.017% of Rs 3lks which is Rs 51, whereas if you had bought and sold an option with premium Rs 100, the turnover would have been Rs 10,000(5000+5000) and STT of Rs 0.85.
4.Options offer you an ability to setup trading strategies for multiple market scenarios.
Option Strategy is a tool which we have introduced on Zerodha Trader which suggests you and helps build option strategies. Find following brief on how to use it:
1. Login to ZT and make sure you launch plus while logging in. If you don’t know how please refer this link.
2. Option Strategy tool, based on your view suggests you various option trading strategies and their payoff graphs. As an example, if my view is that nifty will stay in the range of 5800 and 6200 for this expiry(NOV 2013). First step is for you to add all the nifty option strikes in this range on your market watch, so add 5800 – 6200 Calls and puts with November expiry. Visit this blog to know how to add options onto market watch.
3. See the pic below to launch Option Strategy:
Option Strategy
4. The following window opens, follow the steps as shown in the pic:
Option Strategy
5. Once you give a view the tool will suggest you 5 different strategies, as shown below. For the example, my view is that nifty will stay between 5800 to 6200 for Nov 2013 expiry. My View is that market will remain neutral(that means neither bearish nor bullish) and I also feel that market will be in a very narrow range. This suggests me 5 different strategies as shown in the pic below.
Option Strategy
6. If you are not able to see the prices in the strategy section, click on the restore button as shown below.
Option Strategy
The window will look like below when you click on the restore button and the prices should start refreshing as the data is fetched from your market watch. So Ensure that the option contracts mentioned is available on the market watch as mentioned in point 2.
Option Strategy
7. Follow the steps below to look at the payoff graph for the strategy you select.
Option Strategy
8. Create ” My Strategy” using combinations of strategies suggested, as shown below and you can look at the payoff graph and payoff table. See the Pic below:
Option Strategy
Once you have decided to take an option trade, if it involves writing options(selling options), use the Zerodha SPAN calculator to know the exact margins required. Positions like the above will have margin benefits as they are partially hedged.*
*For all of you who are beginners to option trading, assume nifty 6000 calls is at Rs 100, if you want to buy it because you are bullish you will need only the premium which is Rs 100 x 50(lot size) so Rs 5000 in premium, the maximum you can lose is Rs 5000. But when you write options i.e Sell first and then buy back, you have chances to make unlimited loss and hence exchange blocks margin similar to how they block in futures. So to sell 6000 calls of nifty first and then buy back you would need almost 30k for an overnight trade. This margin goes down for a strategy mentioned in the above pic because the various option postions are counteracting each other. You can see exact margins for option writing/multiple positions on our SPAN calculator by simulating the trade.
Yes you can trade naked options i.e buy calls/short puts if you are bullish and buy puts/short calls if you are bearish, but options as a product especially combination of nifty options offer you an opportunity to setup trades with immenese profit potential. Use this tool to help setup option strategies, study the payoff graph and proft trading options at Zerodha.
Happy Trading,
Zerodha
Your friendly neighborhood discount brokerage
very nice..its useful to like me “option trader” but the major problem is ur not give intraday exposure for option writing..
if u r given more than present condition(i don’t know .how much u r given present) we will happy to trade in option..
Madhan, we give margins for option writing(intraday), pretty high actually. You require only 40% of the overnight required margins and you can use that till 3.20pm. http://www.zerodha.com/z-connect/blog/view/zerodha-margin-policies
Hi sir , for option writing in Bank nifty Weekly Options for overnight Position what is the margin required, i have checked in calulator it is showing around 41000 per lot is this the right margin for overnight Position in option writing ………..and in Upstox the intraday margin for writing options is around 15000 Per Lot but in zerodha there is 27000 Per Lot for mis Order in bank nifty weekly options .
Hey Venky, the margin requirements are defined by our RMS team based on the liquidity and prevalent market conditions. The weekly option contracts do not have enough liquidity to afford very high leverage.
NEED DEMO
It is a very simple tool, but if you still need, shoot an email with your contact info to [email protected]
Hi Nitin,
How do we see the Greeks. Delta Gamma, Theta etc
Tried everything to see them In zerodha trader but unable to bring them on.
Do u have the same in PI
Deepak Kamra
Sir am new to it,am holding a account in zerodha,I want to learn the strategy of trading plz do refer for it,to whom I have to contact
http://zerodha.com/varsity/module/option-strategies/ is definitely a good place to get started.
how to do option trading in zerodha kite. i also don’t have an idea. can you please suggest me. i have a zerodha demat account.
Suggest you to look at this: http://zerodha.com/varsity/
feel like bit complicated but still looks very good tool…thank you very much n nice explanation..
Interesting tool very helpful for people like me who trade on options.
One question don’t we have a lock script option on the strategy graph? So that I can open 2 or more graphs.
No Moses, you can open only one payoff graph at a time presently.
Hi
Do Zerodha provide Span margin on options Ex:
Date=25 Jan 13 Nifty=6000
a) What in the margin to ‘Sell 6200 Nifty Feb 2013 call’
b) What in the margin to ‘Sell 6200 Nifty Feb 2013 call’ ALONG WITH ‘Buy 6000 March 2013 call’
Yes PS, we provide SPAN margin benefit and we have a [SPAN Calculator](https://www.zerodha.com/z-connect/blog/view/span-calculator) which lets you simulate a position like what you have mentioned and also tells you the margin benefit before taking the trade.
Cheers,
Is SPAN calculator available on NOW
SPAN is available only on Zerodha Trader, if you are still using NOW trading platform send a request to migrate immediately..
very complicate, i need trading call.
I am New to option. I did not understand a thing. Is there any way to get some training??
Arm, the above would be beneficial to people who have an understanding on options.. We presently don’t have content on basics of options, but we intend to start something on zconnect, so keep following.. Cheers..
Hello.
If I have 1L in my trading account, can I do the following option strategy.
Sell 3 contracts of Bank Nifty March 12200 put for 290
Buy 3 contracts of Bank Nifty March 12300 put for 340
I want to hold the position for few weeks.
I am guessing the margin required for NRML would be around Rs 3750 (Rs 50*3*25) for this hedge.
Please tell if my thinking is correct.
Sorry, it was Rs 3750 = 50 (difference in the two contracts) X 3 (no of contracts) X 25 (lot size).
Arcus,
Margin required for only writing 12200put per lot is Rs 22581. If you buy the 12300 put, because you are hedging the position, the margin required drops to Rs 15900/lot for both positions together. For taking 3 such positions, you will need 45k in your account..
The way you have calculated margin requirements is wrong, that is why we have introduced http://www.zerodha.com/z-connect/blog/view/span-calculator, SPAN calculator where you can mention your trade and it will automatically let you know the NSE stipulated margin requirements..
Hope this helps,
Cheers,
Thank you very much for the prompt reply.
I was wondering if you guys could open an official forum for Zerodha members so that we could help each other out instead of disturbing the faculty.
You definitely won’t be disturbing us 🙂 , But what you said makes sense, we will try to figure something out on this..
Cheers,
hi
The F&O margin calculator does not have Banknifty option (weekly) expiry.
Does this mean, i can not sell / write options in banknifty weekly expiry cycle?
Pls confirm at earliest.
You can write, margin required is around the same as monthly.
Hello,
after step 8 how to save ” My Strategy”, so that we can access it later directly.
Hello,
Is there a way we can exercise the options in Zerodha Trader ? If so, can you please tell me how to do it ?
Venkat,
All options on NSE today are european now, which means you can exercise it only on the expiry day. In any case on the expiry day all options get exercised by default, so need to have this facility as long as the options are european.
Cheers.
I thought only the Indices were european. Isnt option trading on listed Equities American style?
In PnL (3rd screenshot in this write up) only the Net premium paid is shown and not profit potential.
1. How to check the profit potential?
2. How to add my own strategy, if not available now, please make it available soon.
3. what is the use of the button PnL on last and best, both seem to be giving the same result.
1. Profit potential if you are checking for option buying positions is typically unlimited and hence won’t show on PNL, If you are using short options or any strategy where there is a maximum profit potential, it will show in PNL.
2. If you see on the 4th Snapshot, there is an option to add to my strategy.
3. Last is basically the last traded price and best is basically the best available price. If both are the same, the result will show the same.
1. In the payoff graph, and pay off, break even is missing, which is a key factor in determining which strike price to be taken for trade.
2. The pay off graph is not showing the pay off in between the strike price, say nifty at 5923, corresponding pay off is not showing, which is also vital
Regarding your point 2 (add to my strategy), what I meant was to put my own strike price and check the outcome, for example 5800 and 6000 strike of nifty, whereas in your strategy only the nearest strikes are bundled together, like 5900 & 6000 strike price of nifty
Abrar, Feedback taken, let me bounce it off my tech team and see how much time they will take to sort this.
Cheers,
Also there is a error in bearish strategy, instead of market wont fall, it should be market wont rise. please check all of the errors and whole strategy thoroughly once, strange that no one has pointed out these things even after yr strategy has been online for such a long time..
Hi…
I want to sell one lot 9400 put and one lot 10800 call. when I checked the span margin it was rs.37048. Is this for intraday or shall i carry till expiry… If that is for intraday, how much should i have to carry til expiry?
If you are looking at the SPAN calculator for this by entering product type as NRML, this will be for overnight position and to hold till expiry
If you are checking this with product type as MIS it will be 40% of the required overnight margin for intraday only.
Hi
Kindly go through the following scenario:
Nifty trading at 5310 then took Iron Condor as follows:
Sell to Open 5300 CE 5300 PE
Buy to Open 5500 CE 5100 PE
After couple of days nifty moved to 5625, if the client want to take new Iron Condor position By Sell to open 5500 CE and 5500 PE
And Buy to open 5700 CE and 5300 PE
Then the existing 5500 CE Long position will be offset?
Kindly clarify.
Best regards
Sreejith
Yes Sreejith it will be, you cannot hold opposite positions of same contract on a single trading account..
Hi sir,
If I want to write 5800CE with 40 premium, minimum how much margin I need in my account?
around 20k, you can also check this blog on how to use the SPAN calculator
Dear Team,
Is there any difference between option writing and short selling?
Thanks
Short selling and option writing are definitely very different from each other.
Short Selling: This happens when you sell an asset which you don’t own with the hope that you can buy it back at a lower price later since you expect the price of the stock to go lower. In equities, this can be done only on an intraday basis. For Futures, you can sell and hold until expiry by paying the margin amount for holding that short position.
Option Writing: This is totally different from short selling because you’re earning a premium from the buyer of the option which gives him the ‘right’ to buy or sell an asset at a given price on a later date if the strike price is achieved. Option writers may not necessarily own the asset but they still take on the obligation to deliver the asset if the conditions are met for which they receive a small premium from the buyer of the option.
Dear Zerodha team,
I cannot see the implied volatility figures for options. The pop up window shows all values as zero. Any solutions ?
Thanks.
The pop up window shows Zero, but to calculate the IV you can first add the contract on the marketwatch and click Shift + o, this opens up an option calculator window where you can calculate the IV.
Cheers,
hi nithin
Most of brokerage house around take FD as a collateral , I don’t understand why zerodha does not take FD, when nse has allowed FD’s as collateral..?
I bought NIFTY options for 6300PE @ 120 and want to sell them at 134 premium. How can I sell the lot I bought back at 134? Do I need to open a sell order for that or can I simply square-off the position like in equity?
Ramesh, you can do it 2 ways.
1. Open a new sell order button and mention your price or sell it at market.
2. Go to Admin positions and click on the open position and say square off, this will sell it at market.
Thanks Nithin for the reply.
I went to Admin positions and selected the position, but I don’t see any option as Square-off there. Could you tell me where is it located in that page? Or is it not visible during off-market hours? Pls clarify..
-Ramesh
Is there a cost to NestPlus?
The starter pack is free of cost which includes option strategy, charting, and more. There are certain products on Plus which are paid, you can see more here: https://plus.omnesysindia.com/NestPlus/Home/
sir intraday option best strategy
I have never traded a option but i want to do some trade in it. take the example of today as market were constantly rising in that condition what option i have to buy or sell? For example Nifty 7500CE was trading at around 200 in morning. So to have profit shall i buy call or put option? And i know call is like long and put is like short position. So if market is bullish i shall buy call and if market is bearish i shall sell puts? Am i correct?
I am actually having a big doubt among the 4 thing-:
Long Call Option
Long Put Option
Short Call Option
Short Put option
is long call and short put same?
is long put and short call same?
And one more thing lets say Nifty 7500CE is trading at 200 then what margin i require to have a long position? Is it 200×50 which equals to 10000?
Please clarify my doubts in your free time
Phew, you are starting at the very basic. I’d suggest you to read this once, I’d suggest you to read the equity derivative modules on this link.
Coming back to your question,
1. If you feel market is going up
Buy Calls, if the market goes up, premium will ideally go up and you can profit. But there are days when market could go up but calls premium could loose you money when the implied volatility drops, for example today, even though market is up call premiums are down. When you buy calls, profits are unlimited but the risk is limited to the premium you pay.
You can Short puts, when market goes up, put values will come down and hence if you are short puts you can profit. When you short options, the risk is unlimited and profit is limited to the premium you receive when you short the option. Since the risk is unlimited, a margin is blocked in your trading account similar to futures.
2. Similarly if you feel market is going down
Buy Puts
Short Calls
Long calls and short puts, ideally will make you profit when market goes up, but they are completely different in terms of how you make money and similarly with long puts and short calls.
As explained If you want to buy 7500 CE when trading at 200, you need to have 200×50, but if you want to short 7500CE there is a margin required, which you can calculate using our SPAN calculator.
Nitin ,
i am new to this field , the link which you have provided doesnt have any pdf ,which can explain options and its characteristics. wish to know ,is there any good material available, and if possible can you provide that
rgds
Have you checked out Varsity? Our education initiative, has become quite popular. http://zerodha.com/varsity/
Thank you sir
Hello sir please make me understand Buy price and buy average price and how is buy average price related to settlement price and why it changes on daily basis of options?
Confused with your question Praveen. If you buy 1 lot at Rs 50, your buy price will show 50 and buy average price will also show 50. If you buy the second lot at Rs 100, your quantity will show 2 lots and your buy average price will now show 75, which is the average of 50 and 100.
Buy average price has no relation to settlement price, can you be more specific.
sir i bought 1 lot of Nifty 7300 CE at 75 yesterday and sold it today at 82 but in my admin position it was showing Buy average price as 82.55 and there by it is showing a loss of 27.5
I mailed to Customer care and they told me that daily settlement prices changes everyday
Actually i m new to option trading and i thought i will make a profit of (82-75)x50= 350 but i made a loss of 27.5 instead of selling at 7 Rs higher. I just cant understand how my buying Average price shoot upto 82.55 although i bought only 1 lot of Nifty at 75 and squared it off at 82
If m wrong somewhere then sorry but please make me understand the above
Praveen,
On the trading platform, your profits for today will show based on the closing price of the options for yesterday and not based on your buying price and this is the reason you are seeing a loss and not profits on the platform today. There is nothing to worry, you are actually in profits, to know your exact P&L based on your buying price visit our backoffice. The backoffice will get updated end of everyday, so your trades executed today won’t show up on this, but if you check the open positions tab it will show your correct buying price.
Cheers,
sir i want to ask one small question is there daily settlement price in option too?
Just like futures lets say i bought and hold Nifty 29 May future at 7300 and lets say that day Nifty future closed at 7320 so i will be credited 20×50=1000, Similarly is there daily settlement in Options too let say i bought and hold Nifty 29 May 7200 CE at 100 and that day nifty 7200CE closed at 80 will i be debited 1000?
No there is no daily settlement on buy option positions, so if you bought on 29th May Rs 5000 will get debited (@100) from your account and when you sell at 80, Rs 4000 is credited to your account. If it is done on an intraday basis, Rs 1000 gets debited at end of the day
Hello sir i want to ask one question. What happens to the value of option on expiration date? Does it becomes completely zero. Actually i have been holding a nifty 7300 CE at premium of 56. So shall i sell it or wait till expiration date. If the price becomes zero at expiration then i will sell tomorrow only. So kindly tell me
Praveen, whatever value above 7300 Nifty closes on Thursday the expiry day, will be the value of your calls. If Nifty closes at 7400 it will be 100 and if it closes below 7300 it will be 0. Where will the market go is your call to make, but you can sell the calls whenever you want, there is no need to wait till expiry.
Sir I want to know about this…
Suppose I have bought 8400CE @20 on October 29 contract. And I want to hold this till expiry. Then on expiry should I sell the contract or it will be sold automatically. And also want to know on expiry if nifty close on 8500 …what will be the value of the position and if nifty close 8300 then what will be value of the position I hold.
If you don’t sell, it will get squared off automatically. If it closes at 8500 your option will be worth 100, at 8300 it will be worth 0. But do check this post, explains how STT charged is so much more for in the money expired options, it is best to square off all options that have any value to it in the market on expiry day.
just awesome. i was looking for this .. count me in,.., my number 9000083000
i am already client will transfer funds today. but please make sure how i can start this setup
Hello,
I am completely new for trading registered few days back on zerodha platform want to clear few doubts regarding Option Trading,
1– Is it possible to buy option NIFTY PE 8100 in morning or in noon on Intraday basis and sell it on Next day when there is possibility of further increment ?
2—What will be the difference between if in Product Code I select MIS and NRML in terms of validity ?
3—When my desired price target is achieved then for selling my earlier purchased Option NIFTY PE 8100 what should I do ?
Please help me out with these basic things I hope I will learn it with time on this platform.
Thanks
Avinash Singh
1. Yes, you can but the option and sell the next second itself or anytime before the expiry date of that contract.
2. If you are buying options, you rather use NRML as there is no additional margin you get by using MIS. If you buy using NRML you can hold it till end of expiry, if you buy it as MIS, it gets squared off at 3.20pm.
3. Similar to how you placed a buy, just place a selling order at whatever price. YOu can also go to the admin positions link, and click on the square off option.
Hello,
What is the volume impact on Price of say a 100-lot (5000 contract) trade of Nifty 8000CE if i want to buy at the open and fill the order immediately.
Similarly, if have bought this quantity as an MIS order, at what price will it square off at close – will there be a volume impact on price on this side as well?
Thanks
100 lots on Nifty can have an impact of upto around 1 point on the Nifty. At the market opening it is quite tough to call, it might sometimes be in your favor as well because of the higher volatility. At 3.20pm, when MIS is getting squared off automatically, there can be an impact of upto 1 point again.
Hi,
Just want to confirm, If I trade a hedge strategy where my maximum loss is predefined, and I want to be in strategy till month end. Does Zerodha does autosquare off incase of heavy moment
For example:
If I buy a Unitech Future for October @ 20.00 and simultaneously buy Unitech October 20 put say @ 1.55
In this case my max loss would be 1.55*17000.
So incase like last week there is 20 % moment and unitech is down suddenly to 18 or below or say even upto 15….would my positions be auto square off…
Case 2
If I buy a Unitech Future for October @ 20.00 and simultaneously buy Unitech October 20 put say @ 1.55 and sell unitech 25 call @ 0.40
In this case my max loss would be 1.15*17000
So incase like last week there is 20 % moment and unitech is down suddenly to 18 or below or say even upto 15….would my positions be auto square off…
Amit, we understand that this is a hedged position and won’t square the positions off intraday. But, the profits from your options(notional) can’t get adjusted with the loss on your futures (MTM), and if there is not atleast the minimum stipulated SPAN margin in your account, the positions will be squared off. If we don’t square off, the exchange would also charge a short margin penalty.
Thanks Nitin, If you give time say next day I can add margin, also would like to know more about opening an account..is there a contact person.
Also, are there any charges for pledgeing in and out shares…there are few who charges and few dont..just want to be clear..
You can send an email to [email protected] with an account opening query with your contact details. Someone will get back to you asap.
The entire pledge/unpledge costs around Rs 55/scrip.
Hi,
If I place following order, what would be my brokerage for following order and can I place this combined order at one go at market price.
Buy Nifty future 1 lot
Sell Nifty 8000 call 1 lot
Buy Nifty 7800 put 1 lot.
Since these are 3 different orders, it would Rs 20 x 3. You can place at once using basket order, but since they are different scrips they will be considered different orders.
http://www.nseindia.com/NP/nse_paathshaala.htm
Dear All You Can Register on the Above Link of NSE and a Great Way to Learn Options 😀
Hi Zerodha,
I was checking the brokerage calculator and had a question on the brokerage charged for options. If I buy 2 lots of Nifty calls for 25 and sell them for 30, my profit before any charges is 50*(30-25)=Rs. 250.
Taxes will be very low since taxes will applied on the premium. I had assumed the brokerage too would be applied on the premium, and hence would be 0.01%*50*(25+30)=Rs. 0.275. However the calculator is showing a flat charge of Rs. 20 per order, hence a net brokerage of Rs. 40.
How is the brokerage calculated for options?
🙂 , we would be out of business if we charged brokerage on options the way you have said. Rs 20 per executed order or 0.01% of the contract value whichever is lower. For options, the contract value is Strike+Premium * lotsize.
Mr Nithin
I am a New Zerodha account holder. I have doubt regarding Options Trading on Zerodha Web Platform
My Initial Pay in Amount: Rs. 25000/- on 11-12-2014.
On 11-12-2014 I bought PUT 8000 (Exp: 29-1-2014) 400 Qty for Rs. 33 each and after few hours the index was going up so the PUT value decreased So I decided to sell and sold at Rs 29.75. After that I bought CALL 8700 (Exp: 29-1-2014) 300 Qty for Rs. 45 each. But, I did not sell it until now, I received your margin statement stating that I have only Rs. 21,791.66.
If I click the order book, it shows nothing, I don’t understand and What should I do If I want to buy and sell it some other day.
Please explain how to trade on your web platform. because I could not run your application on my office desktop.
Urgent please
Regards
T. Lakshmanan
Lakshman, best to send your account specific question to [email protected] with your client ID.
To see your historical trades/reports login to our reporting tool Q. You will be able to see your historical trades, P&L statements, and everything else here. On the web based platform, if you go to positions/admin positions, you will be able to see your 8700 calls there, you can either square off from there or else place a selling order directly from the marketwatch.
dear nithin sir, i am new my id RR3456. if i buy 1 lot of asian paint 860 CE @10 on 09.03.2015 and sold it @ 20 on 25.03.2015. my profit would be 10*500=5000. am i right? pls help, know nothing (what is decay in option trading)
Yep you are right. Check this section that will explain you all the option greeks. Also suggest you to look at Varsity, we will be starting a module on Options shortly.
is there any decay in stock price when i hold up to expiry date in option trading ?
Not decay in stock price, but there is time decay in options premiums for sure. Option value = intrinsic + Time value. Time value decays as and when we get closer to expiry.
Hi Kamath,
Could you please tell me how many maximum lots size in nifty or nifty option, one retail trader can place order or can hold.
It is 7500 in one order.
Sir I want Software Like Option Oracle
Is it Availble in zerodha
I mean If I enter quote like nifty It should give all strikes of calls,puts,all expiries with greeks
anything like same availble in zerodha?
Not now Dasari, but we are working on something.
Hi nitin it is very useful for me if you provide any free version software name like option oracle
my option oracle is not giving strike prices
worked fine somedays but now it is not giving any strike price
please help me on this error
it is more helpfull or give me any other software name as suggestion as you know
Dasari, can’t think of any software which gives this info out. As I said, we are developing something, might take some time.
new pi downloaded
– day separator is good , needed it badly
I would like to know whether we can create strategies by mixing futures and options. If yes, then that would be very very nice. Can you please let me know this part
Can you please let me know this part. Can you email the same to me at [email protected]
Hey nithin ,have a few qus,
1)There are two types of options available in the Indian market — European and American. Index options, such as the nifty and sensex, are European-style. This means that they can be exercised only on the maturity of the option.
2)How soon can I sell the stock after I exercise a call option? and how to do it , do I PUT a new contract or excersicing means I bought it and sold it as well.I’m confused? please elaborate.
3)If you exercise an option, the settlement occurs in three business days, just as if you bought or sold stock on an exchange. For example, if you exercised a call and simultaneously sold the equivalent shares of stock, those transactions offset each other. Assuming the option is in-the-money, there is no need to post margin for offsetting transactions. As always, you will want to check with your brokerage firm to ensure you understand their policies.
4)Consider a Put 300 was bought ,if at the time of expiry, market price of Reliance is Rs 320/ – , the buyer of the Put option will choose not to exercise his option to sell. In this case the investor loses the premium paid (i.e Rs 25*100 = 2500) which shall be the profit earned by the seller of the Put option.So, if cmp was 350 would the buyer still lose only the premium if yes, who does this remaining loss of (350-300) rest with. i.e.(of Rs.50 per unit) * 100 = 5000rs.
Thanks in advance and great work with Pi.
Regards
1. All options on India are now European. So they can be exercised only on expiry day.
2. Ah.. looks like you are very new. Okay, so exercising options in India has no meaning as all contracts are cash settled. Let me explain, if you buy Nifty 8500 puts at Rs 100 on say Aug 1st, you can sell it immediately, next day or any day till the expiry day of the contract. On the expiry day, if you don’t do anything, if Nifty closes below 8500 your puts get exercised automatically. If it closes above, it gets expired worthless. So you don’t have to do anything to exercise. If nifty closes at 8450, 8500 puts get exercised and u get Rs 50 for those puts. Do check out http://zerodha.com/varsity/ and the option module.
3. This is not in the Indian context. In India, like I said, everything is cash settled.
4. hmmm.. ur question doesn’t really make much sense. Advise you to go through Varsity. Start at the futures module.
Thanks,
Sorry , a correction in the last one ” the remaining loss of (350-330) *100 = 2000 rest with”
If a 300 put was bought, and the stock price closes anything above 300, the entire premium the put option buyer had paid will become worthless. It will not have any value.
Hey thanks for the prompt reply.
Hello.
I am new to options trading.
I have just the required amount to put a butterfly spread or an iron butterfly in place for a particular stock (around 20-25k). But if I only sell options for the same my margin requirement will be quite high around 70-80k. SO, in order to take benefit of the strategy for reducing the margin what should I do first. Should I buy the options first and then sell for applying the strategy.
OR
Should I sell first and then buy the remaining legs.
OR
I’ll be getting the benefit irrespective of what I buy first.
The main issue is funds in my account as it is just enough to cover the exposure of a particular startegy.
Also, is there anyone in Zerodha customercare to whom I can talk regarding this?
Antriksh, you can send an email to [email protected], we can get someone to call you back on this. But here is the way to do this, use product type as MIS (intraday), take all the positions. Now convert all of them to NRML, this way u will be able to get into the strategy with lesser margins.
Dear Mr. Nitin,
I tried my level best to get hold of you with regards to your software and trading platform issues. I have begged to your team several times that when there is an issue, please communicate to the customers so that they can look for alternatives. You and your team never believes in that. For few months now, we are facing several issues and especially on Monday’s, it is a mess. Today, since morning, none of your systems , Pi, Kite, trade and nest, none of them are working and after several communication with your team, they have accepted that kite is not working. what about other softwares? whenever I made a complaint to your support team, afternoon around 3 PM they call and ask me to update the Pi. I informed them several times that I am working in IT for last 25 years and dont give me such stuff. Now, when such things happens, who is responsible for all the loss occurring to customers? please reply? I am an unsatisfied customer and now started looking for other options. I am now fully confident that “Cheap can be expensive”
Please reply me.
Regards,
Vishnu Sankaran
[…] Option Strategy Tool: A tool which suggests various option strategies based on what your views on the markets are including the payoff graphs for each of the suggested strategies. […]
How to calculate profit and loss of options between the series.
Didn’t get your question. Suggest you to go through this: http://zerodha.com/varsity/module/option-theory/
Sir, I would like to know if I buy 5 lots of Nifty 7600 PE at 27.65 by paying a premium of Rs 10,500 and if I square off at 25(loss). Will I lose my entire premium or just a part of my premium?
One more thing. I would like to ask you. Why am I unable to check option chain or delta of an option on Pi?
This feature not yet enabled.
So I opted for Zerodha open trade, and I figured out how the futures market works. But I see some trades such as: XYZ purchased NIFTY16JUL8400PE NFO @ ₹ 21.0, and I am unsure where actually this was traded. Because in the future index the price of Nifty July is something around ₹ 8,555 and in the option index it’s ₹ 0.40. Could you enlighten me?
You’ve to see the price of 8400 PE which is trading in this range. There are options with various strike prices. https://www.nseindia.com/live_market/dynaContent/live_watch/get_quote/GetQuoteFO.jsp?underlying=NIFTY&instrument=FUTIDX&type=-&strike=-&expiry=28JUL2016
You will loose 0.65 x 375.
Thanks for your response. I will lose 0.65 *375 or 2.65*375. May I know by when we can view option chain and calculate delta of an option on Pi like on ZT?
Ah my bad, yeah 2.65*375. The option chain bit will take a little longer.
While trading in Options, in the expiry date of F& O, we had to close the positions of the particular month. If there are no bidders, even if we put 0 or.05 the option is not getting traded. In these cases whether we still had to pay the STT.
I am guessing these are all out of the money options. If it is expiring worthless, there is no STT to be paid.
Sir,
Kindly advise me when options strategy can be created and traded in the current month.
1. Whether option strategy can be created on the day before expiry or even on the day of expiry.
2. Is options strategy traded on intraday basis.
3. Once option strategy is created is it possible to square off the strategy when our target is reached.
4. Once option strategy is created on the day of expiry do we need to square off the strategy or will it automatically get exercised.
Thanks & Regards,
R.Mohan
There’s a detailed module on option strategies on Zerodha Varsity here: http://zerodha.com/varsity/module/option-strategies/ which you may want to go through. You can post these questions on Varsity.
Hi, NSE has launched weekly Bank Nifty options.
1. However, there is no details available when I am trying to calculate the margin requirement using the Zerodha Margin calculator.The weekly Bank Nifty Options not available in Zerodha Margin Calciulator
2.In KITE, could not locate the BANKNIFTY weekly contracts.The weekly contracts available in PI though.
Please resolve the above two at the earliest.
It will take a few more days to support weekly contracts on kite and on margin calculator. It is available on Pi, the desktop platform.
Hi Nitin, If I take a position in BANKNIFTY weekly contract through PI, is it possible to square off the position in KITE ? Or do I have to square it off through PI ? Also, is the margin requirement same as the monthly contract (Options)
Until we offer it on Kite (a few days away), you will have to sell it through Pi itself.
Hi Nithin,
You mentioned we can take weekly option positions in Pi.
However , when I tried taking position ( after reading your answer ) , it automatically enters the monthly option position – even after specifying weekly expiry. This has cost me some money as well !!! I have sent a mail to your support team on that note. So, Can you please clarify 2 things here ?
1. Can we trade banknifty weekly options using ANY platform of Zerodha ? If no, just for an idea , when can we expect to trade these?
2. Can you please update the users ( via mail or something ) that weekly options are not working in Pi / Kite , so that they don’t take wrong positions !!!
I agree that you guys provide super-easy and fast platform to trade – but on the cost of numerous operational issues, which need to be given the first priority !
Hope things get better soon ..
1. It works on Pi, if you are not able to see this, can you update the latest patch of Pi. (go to help menu, and click on check for updates)
2. We have updated here: https://zerodha.com/marketintel/Bulletin/
Kite should have the weekly options in the next two to three days.
Hi
Banknifty weekly option when will be added to kite? Ppz send me a mail with details how to add it also.
Thx
We should have it up in the next two days.
Bank Nifty weekly option still not available in Kite.Your days has turned into weeks and about to turn into months and then years.Can we expect from you that you be ready with your systems from day one of product launches.NSE announced the launch of the weekly option well in advance yet you are not ready.
Bank Nifty weekly options are already available. Check this post: http://tradingqna.com/39158/how-to-add-weekly-banknity-options-in-kite-marketwatch
Please tell where i will get the margin calculator for weekly bank nifty option trading.
in regular margin calculator it has not shown please guide
You can’t compute weekly option margin using the margin calculator. However margins will be around the same as required for the closest expiry monthly contract.
hi sir,
i have a doubt.
If am selling an call option first, say for nifty jun 7600 CE, price is 430 * 75(1lot). so i should have a fund for 75*430=32250 rs.
then i can buy the same before EoD for 400 per lot.
Is this correct? will there be any extra charges.?
Check this post, explains about option writing. You can use SPAN calculator for checking the margin requirements.
Hi Venu, checked the link you provided and tried to search “banknifty june 18500” in Kite just as shown in the screenshot at http://tradingqna.com/39158/how-to-add-weekly-banknity-options-in-kite-marketwatch, I am not getting the weekly option but I am getting the chain of options for the month (30th june expiry).Please check before responding.Most Harassive.I am sure this will be the case with MCX commodity options as well once they are launched.Finance minister announced in the budget in February that MCX commodity options will be launched and I am sure you guys are not ready as usual.
Check that link again. Search for Banknifty 16 Jun 17000 CE , this will give you Banknifty 17000 CE expiring 16th June. You can similarly select other weekly options.
I face this issue every week. It is very difficult to find Banknifty weekly contract. Still 31st May banknifty contract is not available in Kite and mobile app
The 31st May contract is the same as the monthly option, so there wouldn’t be Banknifty 31st May strike-price, it’d be Banknifty May strike-price.
i am not able to take intrday margins in weekly options why has it been blocked even when it has become very liquid
Only certain strikes are liquid. We will wait before introducing additional intraday margins.
Sir,
I am having positions of ANDHRA BANK – 100 , SBI -50 AND TATA STEEL – 50 Holding.
Now I want square off all position with SINGLE ORDER only . Is it possible with Zerodha kite or PI.
Thanking you,
Shekar
Single click not possible on both right now.
Please extend the intraday MIS square off time of 2:20.
Most of the time we see that during the last few minutes the market varies allot.
Dear Sie,
Are you planing to add option chain with calculation of Greeks in holding position like Sharekhan ?
Dilip
On our list of things to do.
Sir, how do I trade Iron Condors on Zerodha Trader. Please explain with example.
You will have to take all the legs individually.
If all the legs have to be traded individually, Sir can the iron condor be traded on Zerodha Pi also.
Yes, u can trade on all the platforms .
Hi,
does Pi or Kite has this option strategy tool?
Not for now, it is not available on Zerodha trader now as well.
Hi Nitin, Has the option strategy tool been removed in Z trader, I still have it on mine. And found some errors in the strategy window test where moderately bearish says fairly certain market wont fall..looks like there were some other errors too.
Yeah, not supporting this for now.
do you have any near plans to reintroduce it or can you suggest any tool like this?
i find it very handy in calculating the payoffs.
Thank you
You can try options oracle from Samoa sky, it is probably the most widely used. Will take some efforts from your side to integrate data.
Hello Nithin,
We badly need Greeks for option positions. Also getting Option Oracle seems like horse’s horn. What are your future plans for Option traders.
We are working on it, will take us a couple of months.
I too cant emphasize enough the need for Options Chain in Kite and Pi… The calls and puts should be directly tradeable from the Options chain. Also there should be columns for Option Greeks like Delta, Theta, Gamma which are updated in real time with the Option prices.
Hope its implemented at the earliest !
I am new customer. During using Pi (latest version) I selected a contract as :
NFO – NORMAL – OPTIDX – NIFTY – 29SEP2016 – CE – 8800 – NIFTY16SEP8800CE
It added as : NIFTY16SEP8800CE.
1) why it is added as NIFTY16SEP8800CE , not as NIFTY29SEP8800CE when the expiry is on 29-Sep-2016 ? It can create confusion especially in BANKNIFTY which has weakly and monthly expiry while NIFTY has only monthly expiry.
2) why the various details are not displaying correctly in Pi. They are either overlapped, some part is hidden, not displayed correctly ? Is some resolution on which Pi display correctly ?
1. 16 represents year and if it is represented as NIFTY29SEP8800CE how one will know which year it is as nifty has 5 year option contracts at any point of time?
2. If you can write to [email protected] in detail mentioning the same we will answer accordingly or if it is required will call take access of your system and fix it.
Thanks for the clarification of question 1.
Regarding question 2, I have sent email with screenshot to support yesterday around 11:00 AM but till now no response even support ticket is not generated.
Hi,
I have a query regarding call option writing. For example I have 1 lakh rupees in my wallet. I want to write a NIFTY 8600 call(1 lot, qty: 75) at 100/- premium with NRML. Let us suppose it needs 40k as margin. So my order gets executed and I have 60k in my wallet.
Now, premium starts going up.
1. As it is going up, remaining 60k keeps reducing?
2. For example, that day premium ends at 120 and I am not buying it to exit. Next day morning how much will I have in my wallet?
3. Again on that day premium came to 80 and I buy and exits.
Now how much money I will have in my wallet after I exits..
As per my assumption, I will have 1,00,000 – 40,000 – (75×20) + (75×40) + 40,000 = 1,01,500. Am I correct?
1. No, when you short options, the margin blocked will keep going up when in loss.
2. Your wallet remains the same, But there will be more margin blocked.
3. Yep
Hi Nithin,
Can we use Option Strategy tool in PI and Kite if yes then would it be possible for you to guide me.
Hello Nitin
Can you please calculate and the show the premium receivable on Nifty 9100CE – Today it closed at 77.05 including the brokerage tax etc. Because Margin Calculator shows Rs.5554. My manual calculation i.e. 77.05 x 75= 5778.75. Difference is 224.75. Am I right or wrong in calculation. Or is it the tax and brokerage added( So High). As I am a new trader , I am eager to know and plan according to it. Thanks and regards.
You’ll always receive credit of (Premium*Qty) to your account.
Your varsity module helped me clear NISM VIII Equity Derivative in first attempt. Very well explained. Thank You.
I had stopped trading for a while after making some silly common errors which u mentioned in your modules that normally new traders make. But after going through your derivative modules again and again I have learnt a lot specially your shorting OTM call options. I am not trading yet just watching the movement and trading virtually on paper.
Why bank nifty weekly symbols are not seen in the symbol selection in F&O margin calculator in case i need to know the margins for sell. For eg. i want to short bank nifty Dec 8th CE option, but in margin calculator the symbol is not available to calculate the margin required to short, only monthly contracts available.
We’re working on making them available. The margins required for weekly options will be roughly the same as required to the closest expiring monthly contract.
Ok. Thank you.
Hi Nitin,
I am using Kite and PI and also have installed Nest. Actually I was looking for Option Strategy Payoff chart. But could not find it any where. Can you help me for the same?
Currently no payoff chart available on the platform.
Sir,
In the case of Weekly Option in Bank Nifty, Is it an American option or European. Can we buy and sell at any point of time as in the case of monthly option?
Thanks
chandramohan
It works exactly like the monthly option, all options in India are European
Dear Sir / Madam,
Please let me know is there any way in Zerodha kite / PI platform to view the option chain and define Option strategy.
These features are provided by other brokers trading plat form.
In case of zerodha has this features guide me how to use the same or is it in your pipe line for development or future release.
Thanks and Regards
PK Mahalakshmi
It is on our list of things to do.
Hi Nithin,
I’m eagerly awaiting viewing Option chain in PI. This has been on your list since Last year. Please help us on this. This would save lot of headache and would make us more efficient. Any tentative date when we can see option chain in PI ?
We will be providing more than option chain related to options in coming months, but these will take more time. Till then you’d have to use NSE option chain.
https://www.nseindia.com/live_market/dynaContent/live_watch/option_chain/optionKeys.jsp?symbolCode=-10006&symbol=NIFTY&symbol=NIFTY&instrument=-&date=-&segmentLink=17&symbolCount=2&segmentLink=17
when i buy my bank 9thmarch option it always used to say margin exceeds
but 30*40=1200
BEst to send account specific queries to [email protected]
hi sir, if i already take a position say reliance may call of 1440 and nw i want to take a position to sell reliance 1500 call of april can i get margin benefits and how much capital is required for shorting 1500 call pls help me out.thankyou
You can check it out yourself on SPAN calculator.
Hi Nithin ji,
Can you please provide some link of option payoff diagram generator to test my own strategies.
is option strategy tool given in pi
No, this tool is deprecated now.
No, such a tool isn’t available yet.
Is it possible to watch option chain in 1 click in Kite. I need to add the option with strike price every time than only i am able to see the rate. Instead if i can get the option chain with 1 click on underlying scrip than it will be easy to trade. it will save time as well.
On our list to do. Milan, you’d have to use NSE option chain until then.
Hi,
I am not able to see Option startagies in Nest platform. Could you please let me know how to place option strategy in Zerodha.
This feature is no more supported.
Thanks Nithin. Can you please let me know how to initiate Option Strategies in Zerodha?.
Best Regards,
Raghu.
This tool is currently not there anymore.
ok Nitin. Do you have any plans to Implement all option strategies in Zerodha?
Regards,
Raghu
Yes, but will take time.
How can i login to Zerodha trader (Nest Platform). as im not comfortable with Kite.
You can download from here: https://zerodha.com/resources
Hi Guys,
Can you please help me about this message while i am trading for NFO optios buy or sell.
rms:rule: option strike price based on ltp percentage for entity account-zt4839 across exchange across segment across product
I have around 3300 rs in my account and trying to buy bank nifty 1 rs PE ,lot size is 40 but it is giving the above message.
When were you facing this? If you are trading on banknifty weekly options, we run restrictions on the strikes you can trade on the last day.
No, this has expiry date as month end date, I have tried to buy on whole week but no luck.
Best to send account specific query to [email protected]
please let me know why the strategy builder is no longer available. is there any chance it might come back. is there any other places in zerodha where we can analyse before taking an option strategy. without this zerodha platform seems useless for an option trader.
hmm.. this is no more there. Nothing planned for now.
Appreciate your reply, I can understand why it’s not a matter of concern at least as of now. When it comes to tech in trading I saw that innovation in zerodha and by far more attractive than the zero brokerage success formula.
Similarly, when it comes to trading, options are far..far innovative than the conventional equity gimmick, don’t take me wrong 90% of the community do it as a no-brainer.
Being an innovative brokerage firm, I expect you to take much more concern to the options market because why I say is that, I know options market in India is far less superior in innovation than what we see outside (say US) but when a person who wants to think different and do different look upon there must be something that stands out and support him in the endeavour and who knows, where lies the future.
Once again thanks for finding time to reply.
Where to find Option Calculator in Pi?
It is not within Pi. Check this: https://zerodha.com/tools/black-scholes/
Hi
i am new to options trading. pls clarify my doubt
suppose if i sell an option (stock or index) which i dont have in my portfolio,
how long can i hold and buy?
You can hold an options short position until expiry. Check out the options module on Varsity to learn more.
Hi ,
Really Nice Article.
Can you please clarify this below :-
3. STT(Security Transaction Tax charged by the government) for Future is charged on the contract value whereas for options it is charged on the option premium. What this means is if you buy and sell 1 lot of nifty futures at 6000, the turnover generated is Rs 6lks( 3lks+3lks). STT is 0.017% of Rs 3lks which is Rs 51, whereas if you had bought and sold an option with premium Rs 100, the turnover would have been Rs 10,000(5000+5000) and STT of Rs 0.85.
what is Rs 6lks ?
Thanks in advance.
This post was written when the lot size of Nifty was 50. So, 6000×50 is 3 lakhs. Buy and sell together come up to 6 lakhs.
How can i apply option trading
I already have acc with zerodha for Day trading
Hi
Please help me to understand that why Bank Nifty weekly option price of February series is very high. It’s looks like 3 times high from the usual price.
The pricing of an option depends on a lot of factors. I suggest you look at the Black & Scholes calculator to figure out why the options are trading at high premiums.
that I know its depends on lot of factors that same I am not able to understand on this February series Bank Nifty weekly option, I was expecting some specific answers for that as you are a professional.
Hi
Is your operation strategies tool operative now?? or can you suggest any other which can be integrated with your system for Indian market..
hi sorry i mean to say options strategy tool.. please rectify the same while answering
It’s in the works, Gautam. Check out Sensibull.
Hi Mr. Nitin
Today is was Bank Nifty Weekly expiry, I had tried to take some position but every time my orders, Market Order, Limit Order or SL – Order all were rejected every time there was a message : –
rms:rule: option strike price based on ltp percentage for entity
I called customer care, I have been told that you had set the limit on Bank Nifty weekly option. +/- 250 points from the current current Index position. My questions are :-
1. Its for the last day only or for the whole week
2. Its with all the brokers or only with Zerodha
3. If others brokers don’t having same sort of limit, why with Zerodha
As we all aware last day in Bank Nifty Expiry is very important and on some days volatility been much higher by the limits been set by you.
Regards
A.K. Aggarwal
Hi (No Reply to my earlier query, so sending it again)
Today it was Bank Nifty Weekly expiry, I had tried to take some position but every time my orders, Market Order, Limit Order or SL – Order all were rejected every time there was a message : –
rms:rule: option strike price based on ltp percentage for entity
I called customer care, I have been told that you had set the limit on Bank Nifty weekly option. +/- 250 points from the current current Index position. My questions are :-
1. Its for the last day only or for the whole week
2. Its with all the brokers or only with Zerodha
3. If others brokers don’t having same sort of limit, why with Zerodha
As we all aware last day in Bank Nifty Expiry is very important and on some days volatility been much higher by the limits been set by you.
Regards
A.K. Aggarwal
This is explained here.
Hi
The link you have provided not having all the answers, only limit of 240 points is there which is already clear, please clear my other question as well :-
1. Its for the last day only or for the whole week
2. Its with all the brokers or only with Zerodha
3. If others brokers don’t having same sort of limit, why with Zerodha
As we all aware last day in Bank Nifty Expiry is very important and on some days volatility been much higher by the limits been set by you.
Dear Sir, How can i trade calendar strategy in PI
Hi,
This article is very old. Will you be updating these pages based on Kite or anyother platform now.
Thanks
rahul
These strategies aren’t exactly part of how Kite was built and are specific to Zerodha Trader. You can check out Sensibull for building option strategies now. Quite a neat platform by the team. 🙂
Hi Sir.. Is there any way to perform sell verticals or Iron condor from a single screen in Zerodha kite? Also let me know whether we get statistics like POP (Probability of Profit), Volatility ranking and Max profit/Loss for these option strategies?
I am New to the F & O trading. Please help me in understanding the technicalities and fundamentals of this. Thanks
Best check out Varisty.
link not found,
and cant find it in kite or pi….
can you pls update this article….
What are the steps to perform Iron Condor strategy in Zerodha.
Is it mandatory to use Sensibull tool for the same?
No. You can use the Basket order in Kite to formulate an strategy and then execute it. It will help reducing the margins required.
Sensibull is pricy for Option Strategy Builder and putting order. Upstox has Strategy Builder included in their app and option chain also. Why Zerodha doesn’t include option chain IV and simple option strategy for placing order.
Pleas add Option Strategy Builder. We have to wait lot of time and lag in putting order from Sensibull and that too at heavy price
For strategy builder I use opstra.
Sr, Zerodha doesn’t include option chain IV and simple option strategy for placing order.
Pleas add Option Strategy Builder. We have to wait lot of time and lag in putting order from Sensibull and that too at heavy price