Option trading involves the contract between the buyer and the seller to buy or sell a particular stock at a predetermined price and date. But neither the buyer nor seller is obliged to buy or sell the stock.
When you enter into a contract with the help of any online trading platform or with the help of your stock broker, it is called options trading. If you can buy the shares before they expire is called a call option. If you can sell the shares before they expire is called put options. You can enter into the contract by paying a small fee called a contract premium.
The above are some basic terms and their meanings. Now we shall see the options trading procedure right from the beginning.
The first thing you need to do in options trading is a trading account linked with your bank account. There is no handover of any financial instruments, and they are settled in cash only. Options are always traded in a lot size; generally, the lot size is 100 but may increase up to 1000 in some cases. You will need your Aadhar card, Canceled cheque stating the IFSC number PAN Card, Salary Slip, IT Returns or form 16, and select F&O where asked.
The second thing is Margin money- you will need to keep at least Rs. 1 lakh to 2 lakh in your bank account for entering into the options contract.
Third is selecting the Liquid options for trading - If you check the open option contract, you will see there are many contracts open with different strike prices in both the categories of calls and puts. You must choose the liquid option contract. Liquid contracts are those which are near to the current market price.
So, this was all about how you can trade in the options segment. You may choose to undergo the Best Options Trading Course in India to get in-depth knowledge about trading options.
There are two types of options trading depending upon your strategy
So, you can choose between intraday, if you don't want to take much risk, or if you are a risk taker, go for the second option. Apart from this, if you want to know everything about the indicators, strategies, and things to avoid, when to close the contract, etc, you may hire a broker for yourself to help you out understand all these details, or you can start learning via various methods.
If you are entirely new to this field, we may suggest you start with Stock Trading Courses in India and then gradually move towards the options because it is important to clear your basics first.
Many people have questions, where do learn these things? The answer is you could visit the official website of NSE, and there you will find the complete video tutorials. Second, you can register for online institutes. Third, you can approach your broker, as they always have coaching facilities, or you can look up for some video playlist on YouTube. A lot of trading books are available online; choose based on preferences and learn and develop your trading skills.
If you have questions like when can you believe that you know all about options trading or at least enough to start trading, check out the parameters.
If you are well aware of the below listed things, you can absolutely start trading without hesitation
So, whatever method you are interested in or comfortable with, either reading, listening, or watching videos, covers the above points, and you will be ready to trade with the options.
If you want to ask us anything regarding the options, you may call us on the number provided below.