Well, this is exactly where the ‘Delta of an Option’ comes handy. The Delta measures how an options value changes with respect to the change in the underlying. In simpler terms, the Delta of an option helps us answer questions of this sort –“By how many points will the option premiu...
Step 1– The link to the Margin Calculator ishttps://zerodha.com/margin-calculator/SPAN/. As you can see from the image below, many different options are available (I have highlighted the same in black). However, our focus, for now, will be on the first two options called ‘SPAN’ an...
Also, at this stage I have to mention this – people end up buying OTM options simply because the premiums are lower. Do not fall for this, the low premium of OTM options creates an illusion that you won’t lose much, but in reality there is a very high probability for you to lose ...
Unlike the delta, the Gamma is always a positive number for both Call and Put Option. Therefore when a trader is long options (both Calls and Puts), the trader is considered ‘Long Gamma’, and when he is short options (both calls and puts) he is considered ‘Short Gamma’. For examp...
We have discussed the S&R levels here – http://zerodha.com/varsity/chapter/support-resistance/ . Volatility based stoploss is something we have not discussed yet on Varsity, we will do it in the options module. Reply RK0987 says: April 23, 2015 at 9:56 am thanks, karthik, pls ...
We recommend readingthis chapteron Varsity to learn more and understand the concepts in-depth. Key takeaways from this chapter Buy a Put Option when you are bearish about the underlying prospects. In other words, a Put option buyer is profitable only when the underlying declines in value. ...
Check the technical analysis module here: http://zerodha.com/varsity/ Reply Javed says: May 31, 2016 at 10:17 am Hey Nithin, When can we expect Supertrend in Pi? Keep it up, you are doing an awesome job. Thanks Reply Nithin Kamath says: May 31, 2016 at 1:53 pm Next release...
Why do options trade at lesser than the theoretical value on the last day of expiry? Why is it important to square off ITM (in the money) options rather than let them expire on the expiry day? Not knowing the answer to the above questions can cause a potential loss and hence the reaso...
1.What do you mean by Open Interest (OI) in futures and options? Futures and options are contracts and similar to any other contract it is a contract between a buyer and a seller. Buyer is bullish (expecting the market to go up) and seller is bearish (expecting it to go down). Only...