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Basics of Options Trading FAQs

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What is the reason that the intrinsic value of options contracts can never be Negative ?

The intrinsic value cannot be negative. It is positive if the option is in money (ITM), and zero if it is out of money (OTM). It cannot be less than zero. An option contract's intrinsic value is the amount a …

What does Option contract adjustments mean ?

The stock price can be affected by events such as mergers, splits or take-overs. Stocks can also be affected by derivative Options. Options contract adjustments are made to account for corporate events or actions and to ensure that the Option …

How to know the difference between American style options and European style option ?

American-style options are contracts that can be bought/sold or exercised anytime before the expiry date. Individual stocks can be purchased or sold at any time. European-style option contracts cannot be bought/sold or exercised after the expiration date. All Index options …

What does Long Dated Options mean ?

Long-dated options are contracts that have a maturity of at least 3 years. Other features of long-dated options are the same as monthly contracts. What happens to long-dated options? Long-dated options expire the last Thursday in each month. If Thursday …

What does weekly options refers to ?

Weekly Options Definition - A weekly option refers to a contract that has a maturity of one or more weeks. Other aspects, such as tick size, underlying, strike prices intervals, etc., are the same as regular monthly options. What is …

What does Index Options mean ?

Index Options are options contracts in which the underlying is an Index, e.g. Nifty 50 and S&P BSE-Sensex. Each option of an index is a collection of stocks that are based on a particular theme. The weight of each stock …

What is the minimum amount needed for purchasing Options trading ?

To purchase an Option, you will need to pay the premium plus brokerage charges. Options come in different lot sizes, which can vary from stock to stock. You would have to pay a premium for 1 lot, regardless of how …

How Stock trading is different from Options trading ?

Option trading is where you purchase a contract that gives you the right, but not the obligation, to buy the underlying at a specific price within a certain time period. Stocks trading allows you to buy shares that allow you …

How Forex trading is different from Options trading ?

Options trading allows you to trade contracts that allow you to purchase or sell the underlying asset at a specific price and for a certain period of time. The price movement of an underlying asset is what you use to …

In India what are options trading exchanges?

Option trading exchanges in India include NSE and BSE. SEBI regulates both exchanges and ensures fair and transparent trading. Options can be traded on OTC markets in addition to NSE or BSE. These are not standardized deals between private individuals …

How much charges paid for options trading ?

You will be required to pay brokerage fees and taxes in addition to the premium you pay to purchase an Option. These are the main charges you will pay when trading Options. Brokerage It all depends on the brokerage company …

What does options trading after hours mean ?

After-hours Option trading is the purchase/sale of options after market hours, i.e. From 9:30 AM to 3:00 PM. After-hours Option trading can be done using After Market Orders (AMO). You can order to buy/sell options from this site at any …

What are the advantages of option trading ?

Options trading has seen significant growth in recent years due to the many benefits it offers, Lower Investment:Options are more cost-effective than buying stocks directly. Options allow you to trade the stock and make a profit, but you must pay …

What do yo mean by the lot size F&O of NSE?

The minimum number of shares required to enter an Options contract is called a lot size. The NSE F&O (Futures & Options) lot size varies from stock to stock and index to index. Nifty 50 has a lot size of …

How buying a put option is different from selling a call option ?

The Call Option allows you to purchase the underlying at a specific price and for a certain period of time, but not the obligation. The Put Option gives you the option to sell the underlying at a specific price and …

What does call and put option in bank nifty mean ?

Bank Nifty is an index that includes 12 banks from both the public and private sectors. Bank Nifty Options has a lot size of 40. The underlying asset in a Bank Nifty option is the Bank Nifty Index. Bank Nifty …

Can I buy or sell of Options in pre - market trading session ?

You cannot place options orders during pre-market trading. Pre-market trading is only allowed for equity cash. Brokers offer AMO (After Market Order), which allows you to place orders for trading after the market closes. Ask your broker about the AMO …

What is the expiry date of NSE ?

All 1-month option contracts expire on Thursdays. If the last Thursday in a month is a trading holiday the expiry date is the previous trading day. All option contracts expire at normal market closing times, i.e. The expiry date is …

What are options trading timing in India ?

Market timings for trading Index and single stock options in NSE or BSE are 9.15 a.m. to 3.30 pm on trading days (Monday through Friday, excluding holidays). This is the time you can place orders to purchase and sell Options.

Is it possible to trade in US options from India ?

You can legally trade options in the US and other countries from India. To trade derivatives, however, you will need an account with a US-registered foreign broker. Many Indian brokers, such as ICICI Direct and Kotak, offer an Overseas Trading …

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