Come into the Trader's Den

[rrmhatre72]

Market Wide Position Limits (for Derivative Contracts on Underlying Stocks)

At the end of each day the Exchange disseminates the aggregate open interest across all Exchanges in the futures and options on individual scrips along with the market wide position limit for that scrip and tests whether the aggregate open interest for any scrip exceeds 95% of the market wide position limit for that scrip. If yes, the Exchange takes note of open positions of all client/ TMs as at the end of that day in that scrip, and from next day onwards the client/ TMs should trade only to decrease their positions through offsetting positions till the normal trading in the scrip is resumed.

The normal trading in the scrip is resumed only after the aggregate open interest across Exchanges comes downr to 80% or below of the maket wide position limit.

That's what the exchange says, so we take it as gospel.

You mean if yesterday's open position is 100k contract & if we have addition of another 95kcontracts today then particular script get banned.
Then do exchange intimate all clients to square of position. Till then no new player can take entry in this contract.
Once open contact reduce from 195k(100k +95k) to 180k then this contract is made open to all to start trading in it.
Am I correct in my understanding?

 

[DanPickUp]

I got a doubt in option pricing.

I was thinking that market price of an option will always be higher than the theoretical price. I wasn't checking every now and then. But I have checked few times, market price of an option was higher than theoretical price.

But now, CE of nifty trading lesser than theoretical price. I thought that option will be trading at least 10 point higher than theoretical price.

Is it all based on demand and supply or its because of long weekend? or its because I took position? :annoyed:

When I took position it was trading more than 10 points now its trading @ -5 points.

My guess/thought about option pricing was wrong or it happened for some other reasons???

Hi nac

Hope this helps : http://www.traderji.com/options/46280-my-options-picks-intraday-delivery-9.html#post483535

I am not sure, if you had a look at the markets volatility or also called: The Implied volatility.

There is no reason, that options always should be priced 10 points higher then the theoretical price. Do not follow such rules, as they are not useful.

An other reason is the bid ask spread. I do not know, how you bought the option. If you buy it market, then you usually get the worst price filled. And this can be a significant amount of money.

Take care

DanPickUp

 

[nac]

^

It doesn't mean I am following that. Just thought...

Yeah I get the volatility. But still trading lower...

Fine, now I take it like this...

When a contract can trade @ premium, it can trade @ discount as well... So it happens sometimes. Unfortunately, it is happening when I am in position.

 

[DanPickUp]

^

It doesn't mean I am following that. Just thought...

Yeah I get the volatility. But still trading lower...

Fine, now I take it like this...

When a contract can trade @ premium, it can trade @ discount as well... So it happens sometimes. Unfortunately, it is happening when I am in position.

Hi nac

As every other thing ( include no mistakes with any comissions you payed ) not gives an answer about why ? it has to do with the longer weekend in your home.

If I not have to do for certain reasons, I never buy any option on a Friday, as the weekend is already priced in. In India is today option Friday, as I re read your comments. Is this right ?

If you say, that you did the calculation with the right volatility, then change the expiration date to an earlier day. You loose now at least three days on the time side. If you before gave in X days left to expiration, you give now in X - 3 days = Z.

Give in Z and calculate again. But be sure about the volatility. Compare now this price with the actual price. It should now really come near to the market price. If not, then your option price makers are real cheaters or use a complete other system to calculate there options.

Have a nice long weekend

DanPickUp

 

[MindlessTrader]

Hi nac

As every other thing ( include no mistakes with any comissions you payed ) not gives an answer about why ? it has to do with the longer weekend in your home.

If I not have to do for certain reasons, I never buy any option on a Friday, as the weekend is already priced in. In India is today option Friday, as I re read your comments. Is this right ?

If you say, that you did the calculation with the right volatility, then change the expiration date to an earlier day. You loose now at least three days on the time side. If you before gave in X days left to expiration, you give now in X - 3 days = Z.

Give in Z and calculate again. But be sure about the volatility. Compare now this price with the actual price. It should now really come near to the market price. If not, then your option price makers are real cheaters or use a complete other system to calculate there options.

Have a nice long weekend

DanPickUp

exactly Dan....NIFTY 6300 CE cmp is 107( theoritical value is 116 , if you count days from today)....but if days calculated are based on monday 8th nov...due to long weekend ....so its rightly priced....

 

[nac]

Do anybody explain in detail what does it mean?

Nifty is computed using Free Float Market Capitalization weighted method, wherein the level of index reflects the free float market capitalization of all stocks in Index.

 

[dharamthacker]

SBI Caps Security feedback please...

hi guys, i am new to trading..i have open dmat & trading account with SBI Caps. How is the service of SBI Caps ? Have i done right thing joining this broker ? OR should i choose some other broker ??

Suggestions Welcomed..

Thanks in Advance..

have a nice day ahead..!!

 

[murthymsr]

Do anybody explain in detail what does it mean?

Nifty is computed using Free Float Market Capitalization weighted method, wherein the level of index reflects the free float market capitalization of all stocks in Index.

Very loose interpretation for better understanding:
Total Market capital = no shares issued X Price of a share.

Some of the shares are held by the promoters with management control, whereas rest are held by public, institutions etc without management control.

Shares held by promoters are dead stock, as they are not generally available in the market for trade, lest management loses control over the company.

Free Float market capital = shares held by non-promoter groups X price of a share

Earlier, weightage of a nifty stock was decided by total market capitalization, where as it is now being calculated by the free-float method. The later is the more popular method internationally.

with free float market capitalisation introduced for nifty, in general PSU stock's weightage has come down, as Govt was holding a majority stake in them, compared to private companies.

With disinvestment going on, the picture may change in times to come.

murthymsr

 

[veluri1967]

Re: SBI Caps Security feedback please...

hi guys, i am new to trading..i have open dmat & trading account with SBI Caps. How is the service of SBI Caps ? Have i done right thing joining this broker ? OR should i choose some other broker ??

Suggestions Welcomed..

Thanks in Advance..

have a nice day ahead..!!

You are better judge about SBI Caps since you have a/c with them.

Alternatives are available. Visit the threads under Brokers.

 

[nac]

Just need to know whether there will be enough participants (trader) in options (Nov expiry contract, and ATM options or Near ITM/OTM options) after 1400hrs on expiry day (today).

Is it good to initiate a position after 1400hrs?