How to make money by trading in futures and options – rediff getahead 1 trillion zimbabwe dollars to usd

.

In an online chat with Get Ahead readers on October 9 Nithin Kamath, CEO, Zerodha.com answered readers’ queries on how to trade in futures and options.

Nithin Kamath: SEBI does a rigorous check on background of promoters, networth requirement, market knowledge of the management, technology and risk management systems before allowing a brokerage to offer f&o, along with this there is continuous audits done by the exchanges to ensure that everything is in place.

Nithin Kamath: Futures and options requires some commitment in terms of time to learn how to trade and then tracking your trades once you have taken them usd to vnd conversion. If you are a positional trader, then I guess a person who can commit atleast a couple of hours everyday cool pictures to draw. Also, the business involves leverage and can be an emotional roller coaster, so a person who can handle that volatility.


Nithin Kamath: Best books to get started with are those which talk about the good habits of profitalble traders as mentioned below usd exchange rate history. But once you are done with that, it is self discovery in reading and researching on what strategy best suits u.

Nithin Kamath: f&o trading or trading in general requires a lot of time effort and dedication rm to usd. The only way to learn trading is by actually putting up your money, only then will what you read make sense jpy to usd chart. But it also important that the money you put is something you can afford to lose usa today sports scores. As I said earlier, try reading about what most profitable traders in the world did right in the book Market Wizards.

kapadia: premium for which strike prices have high implied volatility? What does it imply and how to make money using this high implied volatility?

Nithin Kamath: Usually out of the money options have a higher IV, the trade typically could be if it is much above the mean IV, it could be a good time to sell them and much below the mean time to buy.

Tharun: If i sell a call on starting of month ex.18 rs/-, when it reaches to zero on expiry,so i get profit of 18 rs? How can i calculate margin required for writing a option?

Nithin Kamath: We provide a tool called SPAN calculator, http://www.zerodha.com/z-connect/blog/view/span-calculator this allows you to calculate html to word converter. We will be soon providing a similar tool on our website which can be used by everyone.

Nithin Kamath: Don’t have the exact numbers but the range is between 10 to 40, at the lower end better to buy options and at the higher end to write them hoping that it will revert to the mean.

Nithin Kamath: Historical volatility is simply historical volatility in the price of the underlying euro to usd chart. Volatility affects options more than the futures, higher volatility usually would mean option would be priced higher.

Nithin Kamath: Yes liquidity is pretty bad if you go for anything other than present month usd to inr today. Also the activity in stock options is really low.

Nithin Kamath: There is no preset strategy to trade on expiry day, all you have to be careful is about not letting your in the money options expire (you rather sell it on the exchange rather than holding it till the close of trading on the expiry day. The reason for this is because the STT on expired options which are in the money goes up significantly.

Nithin Kamath: call writer makes money when the markets don’t go up above a certain point and put writer if market doesn’t go down below a certain point.

Nithin Kamath: The most important rule while trading f&o is to be very conservative, since there is a risk of losing money fast, risk only that which you can afford to lose, ideally should not exceed more than 15 to 20% of your investible capital.

Nithin Kamath: IV of an option contract is the value of volatility of the underlying instrument. Most trading platforms have an in built tool to calculate IV, this is typically using the Black Scholes model.

Nithin Kamath: Risks associated are the same, since you are trading with leverage, i.e more money than what you have in your account, the risk of losing money fast if your trade is not right.

Nithin Kamath: It is advisable for a beginner trader to start off buying options rather than writing/selling them. Once you get a hang of how the business works, you can look at writing/selling them as well.

Nithin Kamath: Trading in f&O basically lets you get over the basic limitations of trading stocks. 1. it can be used to hedge, similar to insurance policy for your portfolio 2. Speculate, while trading stocks if you feel stock/market is going down, you can sell and buy back only for intraday, whereas in f&O you can run this position upto 3 months.

Nithin Kamath: Since when trading on f&O, you get a leverage, the profits you can make also gets multiplied usd inr forecast. But leverage is a double edged sword, so the risk also goes up quite a bit.

salim: I have heard about straddles and strangles in F&O. But how do they help me make profits? What are the risks associated with such strategies?

Nithin Kamath: Straddles and strangles are option strategies that you can take when instead of direction of the markets, you are betting on the volatility. Safer than naked options trading because your risk is hedged.

Nithin Kamath: The best way to start off trading markets is by knowing what the profitable traders do, so in that context Market Wizards by Jack Schwager is a good way to start. Photographs: Uttam Ghosh/Rediff.com

All materials are found on open spaces of a network the Internet as freely extended and laid out exclusively in the fact-finding purposes. If you are what lawful legal owner or a product and against its placing on the given site, inform us and we will immediately remove the given material. The administration of a site does not bear responsibility for actions of the visitors breaking copyrights. abuzesite@bigmir.net

banner