Everyone knows that buying something now and selling it later at a higher price is the path to profits. But that is not good enough for option traders because option prices do not always behave as expected, and this knowledge gap could cause traders to leave money on the table or incur unexpected losses.

When trading options, it’s possible to profit if stocks go up, down, or sideways. You can also lose more than the entire amount you invested in a relatively short period of time when trading options. That’s why it’s so important to proceed with caution. Even confident traders can misjudge an opportunity and lose money.

Warren sells options with a very long term time horizon of usually more than 15 years, which is overpriced in his view due to the limitations of the Black-Scholes Model. Using the premium he receives from selling puts, he uses it to invest. His options are also “European”.

So, is options trading risky? If you do your research before buying, it is no riskier than trading individual issues of stocks and bonds. In fact, if done the right way, it can be even more lucrative than trading individual issues.

When you buy a put option, you get the right but again not obligated to sell the stock at the strike price before the expiration date. Yes, Option Trading is very much worth it. Options are a type of Derivatives contract where the holders of the contract will have the right to Buy/Sell the underlying asset.

The bad part of options trading is that if you are buying puts and calls, your winning percentage is likely to be in the neighborhood of 50%, considerably less than a typical long-term stock investing system. The fact that you can lose 100% is the risk of buying short-term options.

It also shows whether a stock is in Ban List or has chances of a possible entry in the near future….All.

When outstanding positions in an F&O stock cross 95 percent of MWPL, the security goes into a “ban period”. In the ban period, no fresh long or short positions can be taken. Traders, who have existing long and short positions will be allowed to reduce their positions by squaring-off.

On January 13, the day of the announcement post-market closing, SAIL was in a derivatives ban, which meant only existing futures and options positions could be squared off, with no fresh positions allowed. Pachisia expects the strong investor interest for the OFS to spur demand for SAIL shares on the secondary market.

The idea of the stocks ban in F&O is to prevent excessive speculative activity. The stock exchange imposes an F&O ban when the aggregate open interest of a stock crosses 95 percent of the market wide position limit (MWPL). – 20 percent of the number of shares held by non-promoters, or free float holding.

F&O #BAN Enters Ban: BHEL, PVR Still in Ban: IDEA, JINDALSTEL, JUSTDIAL, NCC @CNBC_Awaaz #AwaazMarkets.

No F&O contracts for Yes Bank from 29 May; NSE not to accept fresh bank guarantees by lender. NSE said that due to the recent development in Yes Bank, it has been decided that no fresh or renewal of bank guarantees and fixed deposit receipts issued by Yes Bank limited shall be accepted.

Trade in Equity Futures in 3 Easy Steps:

1. Step 1: Buy Equity Future. Assuming that you have an account with a share broker in India to trade in F&O segment; the first step is to buy (or sell in case of short-selling futures) a future contract.
2. Step 2: Hold Equity Future.

A Future is a right and an obligation to buy or sell an underlying stock (or other assets) at a predetermined price and deliverable at a predetermined time. Options are a right without an obligation to buy or sell equity or index. A Call Option is a right to buy while a Put Option is a right to sell.

CNX Nifty futures contracts expire on the last Thursday of the expiry month. If the last Thursday is a trading holiday, the contracts expire on the previous trading day.

The brokerage of Zerodha Max Rs 20 per trade while the brokerage of Upstox Max Rs 20 per trade. Both the brokers are Discount Brokers. Overall rating for both the brokers are also equal with rating 4.5 out of 5.