Part 6 Learn Institutional Trading

Options in Indian Markets

In India, options are traded on NSE and BSE, primarily on:

Index Options: Nifty, Bank Nifty (most liquid).

Stock Options: Reliance, TCS, Infosys, etc.

Weekly Expiry: Every Thursday (Nifty/Bank Nifty).

Lot Sizes: Fixed by exchanges (e.g., Nifty = 50 units).

Practical Example – Nifty Options Trade

Scenario:

Nifty at 20,000.

You expect big movement after RBI policy.

Strategy: Buy straddle (20,000 call + 20,000 put).

Cost = ₹200 (call) + ₹180 (put) = ₹380 × 50 = ₹19,000.

If Nifty moves to 20,800 → Call worth ₹800, Put worthless. Profit = ₹21,000.

If Nifty stays at 20,000 → Both expire worthless. Loss = ₹19,000.

Option Trading Psychology

Patience: Many options expire worthless, don’t chase every trade.

Discipline: Stick to stop-loss and position sizing.

Avoid Greed: Sellers earn small consistent income but risk blow-up if careless.

Stay Informed: News, earnings, and events impact volatility.