How does Nifty put option work?

To make the most of your view of the market, you could purchase a 1-month put option with a strike price of 5900. If the premium for this contract is Rs 10 per unit, you will have to pay up Rs 1,000 for the Nifty put option (100 units x Rs 10 per unit). You will thus choose to exercise your option and sell the index.

How can I make money in Nifty options?

As opposed to buying a futures contract, A can buy a 10700 call option on Nifty by paying a premium of Rs 200 (closing price on Friday) per share. If Nifty jumps by 100 points at expiry to 10800 the option value will rise by around Rs 100. The seller of the option has to in this case fork out the money.

What is the minimum amount to trade in Bank Nifty?

Contract size The value of the futures contracts on BANKNIFTY may not be less than Rs. 5 lakhs at the time of introduction.

What is Nifty option premium?

The premium on an option is its price in the market. Option premium will consist of extrinsic, or time value for out-of-the-money contracts and both intrinsic and extrinsic value for in-the-money options. An option’s premium will generally be greater given more time to expiration and/or greater implied volatility.

How much is needed to trade options?

So to buy an option at Rs 100, you need to have only Rs 5000 ( Rs 100 x 50), but to write an option you will need around Rs 25,000 which is marked to market daily, which means that if there is a loss you are asked to bring in those funds to your trading account by end of the day.

Can I sell Bank Nifty options?

Nifty Futures:In a future contract, the buyer and seller agree to buy or sell the nifty contract on a future date. During the period of the contract, you can sell it and make a profit if you see that the price has gone up. If the price goes down, you can wait it out till the date of settlement.

How is put option value calculated?

The value of a put option equals the excess of the price at which we can sell the underlying asset to the writer (i.e. the exercise price or the strike price) over the price at which the asset can be sold/purchased in the market.

How much money do I need to sell Nifty options?

For one lot of nifty option selling, you need around Rs 50000 ( exact amount depends on the nifty value and the prevailing market conditions at the time of option selling ). Interesting is the fact that you want to sell an option and asking about the money required for selling.

Are You a buyer or seller of banknifty options?

Either you are the buyer of a Put Options or the seller of the call options. Let’s see both the scenarios. If you are a buyer of Put options then to sell 1 lot of Banknifty or Long Put on Banknifty, you need to pay premium money at the time of buying the Put Options.

How do I Sell Bank NIFTY options on expiry?

If you are the seller of call options or Short Call on Bank Nifty, you have the obligation to sell Bank Nifty on expiry if buyers exercise his right. You take a premium from the buyer and pays the margin money.

How much does it cost to buy a $11 put?

For example, the $11 put may have cost $0.65 x 100 shares, or $65 (plus commissions). Two months later, the option is about to expire, and the stock is trading at $8.