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The start of 2022 had been an interesting one. After two straight calendar years of bull market, 2022 was expected to be a bit tough. With inflation inching higher, clearly troubles were looming. That got accentuated by geo political, supply

Every business has a business plan and trading is also a business how many of you who are trading have a trade plan? The answer is 99 % traders don’t a have a written trade plan, now you know why

Option spreads is one of the most interesting strategies. It helps one play multiple factors in a go. For instance, if one has initiated a Debit Spread, the play of Delta remains intact while getting protection from diminishing Vega and

It is believed that stock price and in turn index levels are a reflection of collective intelligence of the market participants. Different participants view situations differently and also view a wide variety of situations. They input their thought process in

For last couple of years, buy backs have become extremely common. We see this extremely prevalent not just in India but across the markets in the world. So, what is a buy –back? Simply speaking, it is the company repurchasing

Covered call writing can be simple or complex, depending on your approach. Through the selection of the underlying stock to buy and the particular call option to Sell, the strategy can be tailored to a multitude of different risk levels and market conditions,

The concept of exchange traded contracts is based on the premise of standardisation, liquidity and elimination of counter party risk. Standardisation means having a lot size, a fixed number of shares in each lot (bunch). Liquidity means having enough buyers

Implied volatility is a force in itself. This means than an option contract could gain or lose value purely on the market’s changing expectation of volatility even if the underlying stock price doesn’t move at all.  There are not many

An option’s price is comprised of two major components. The first being the option’s Intrinsic Value or value should the contract be exercised/assigned right now.   For example, let’s assume you are long a 100 strike call option, which is

There are typically three types of participants in the market; speculators(traders), hedgers and arbitragers. Arbitrage is though not price impacting is very important to contain price impact. Arbitragers are crucial part of the market as they provide liquidity to the

Warrant is a derivative instrument. A warrant gives the right to its holder to buy the underlying from the company/issuer at a predetermined price on a predetermined date. Like options it also has a lots size. Warrants are listed and

Options come with a phenomenal advantage, one can create strategy which comes in handy in terms of capital commitment, risk appetite, view, reason of the trade, probability of success and so on. The interesting thing here, is that it creates

Data is the new oil, has become the buzzword for almost a decade now. We have moved from being a data starved to a data overloaded market. Infact, the problem now is how to cut the noise and understand things

Since 2014, we have seen great transformation the way individual investors were investing in the stock markets. There was a sharp institutionalization of investments that people did. Initially, what looked like a small wave turned out to be a tsunami. 

Risk-takers are paying a steeper price to participate in India’s equity derivatives market. Traders betting on the direction of the index or a stock without insurance are paying higher upfront money. The changed rules, however, encourage safer strategies like hedged

The current moves in the market has been leaving many of us perplexed. Markets have been moving higher despite of the activity on the ground staying pretty subdued. Any news of slightest opening up of economy or business push the

So far probably you have been given the textbook definition of delta. But here’s another useful way to think about delta: the probability an option will wind up in-the-money at expiration. Technically, this is not a valid definition because the

You’ve probably heard this one a million times before. When trading options, just as when you’re trading stocks, it’s critical to control your emotions. That doesn’t necessarily mean you need to have ice flowing through your veins, or that you

People were not made to trade. They were made with emotions. Emotions are wonderful in life; I’m so happy I’m an emotional being! However, emotions play havoc with trading. The ideal trader is one who decides on a system and carries

We measure how expensive or cheap options are using a parameter called implied volatility, or IV for short. The term implied volatility comes from the fact that options imply the volatility of their underlying, just by their price. A computer

Since volatility is measured using percentage price variations, higher priced assets don’t exhibit higher volatilities just because of their higher price. Therefore, one would think that volatility and price would bear no correlation. However, it so happens that with most assets,

Volume is simply the number of contracts traded on a given day. Both volume and open interest are indications of the depth of a market. Neither is more important than the other. However, volume could be considered a more immediate indication of

There are many different option strategies with many different risk – reward depending upon one’s view on direction and or volatility. How does the individual trader select the best strategy? In short, the individual trader must choose the strategy that

There is an old adage which says “Sell in May and Go Away”. It is widely used in media nowadays. But nobody talks about its relevance. The phrase is thought to originate from an old English saying, “Sell in May

A vertical credit spread is constructed by buying one option and selling another option of the same type (call or put) in the same expiration month, where the option sold is more expensive than the option bought, resulting in a net credit

A condor consists of an out-of-the-money credit spread in calls and an out-of-the-money credit spread in puts. Initially, you try to receive approximately the same credit for each side and create a balanced, or delta-neutral, position.   Traders who prefer

A lot of money can be made by simply riding a trend. Not only is going with the trend wise, but buying and holding a position for weeks is less stressful than day trading or swing trading. New options traders

Most traders are first attracted to options for high-leverage directional trading. Directional trading is where the trader believes he knows which way a stock, index, or future is going and opens an option position to take advantage of the expected

Years ago, the conventional wisdom was to sell options, placing time decay on your side. In recent years, pundits have made a case for buying options. Lawrence McMillan, the icon of options, in the April 27, 2000, issue of The

I’m a great believer in using the right tool for the job. The backspread is an amazing little strategy when you expect a potentially big price move, but at the same time you realize that there is a chance you