Need Help About the Option

[arghali]

Hello all,

I never trade in the Option but I go through Several Books and I m getting confused.
1. How can I Make profit eg. I bought RIL 2400@40 and the premium goes to 50 but the RIL trade at 2350 than what will be my profit?
2. Different between the Exercised price and Square Off? Can I square off my position at any time?
3. I trade through Motilal Oswal Terminal. I saw when I go through the Order book There are two option Like Day/IOC It means when I bough for long which option should I choose?

Thanks

 

[columbus]

Hello all,

I never trade in the Option but I go through Several Books and I m getting confused.
1. How can I Make profit eg. I bought RIL 2400@40 and the premium goes to 50 but the RIL trade at 2350 than what will be my profit?
2. Different between the Exercised price and Square Off? Can I square off my position at any time?
3. I trade through Motilal Oswal Terminal. I saw when I go through the Order book There are two option Like Day/IOC It means when I bough for long which option should I choose?

Thanks

I generally do not trade in OPTIONS, with little knowledge I have ,I try to clear you doubts:

1.When you square off your transaction ,an amount equivalent to Premium difference * lot size is added to your account .In the present case (50-40)*75 =750 is added to your account.

2.Take the present case of Reliance2400 @ 40 which went up to @50 while spot was at 2350.

Squaring off means doing OPPOSITE operation.Most of the options (99%) will be squared off.
Present case:
SQUARE OFF means 50-40= 10
Exercise means difference between Spot and Strike price.In the present case it is -ve. Better to opt for SQUARE-OFF.The problem with options is difficult to find BUYERS at extreme ranges or at far ranges.

3.I do not trade with Motilal Oswal, perhaps IOC means to CARRYFORWARD your positions.


Please go through the link for more details:

http://www.traderji.com/options/16318-difference-between-exercise-square-off.html#post124474

 

[AW10]

IOC mean Immediate or Cancel = it is equivalent to market order.
Day Order = valid till the end of the day. You can spacify limit price here.
The order, if not filled during the day, will be removed from the system in the night.. so you won't see it tomorrow.

Happy Trading.

 

[rkkarnani]

Hello all,

I never trade in the Option but I go through Several Books and I m getting confused.
1. How can I Make profit eg. I bought RIL 2400@40 and the premium goes to 50 but the RIL trade at 2350 than what will be my profit?
2. Different between the Exercised price and Square Off? Can I square off my position at any time?
3. I trade through Motilal Oswal Terminal. I saw when I go through the Order book There are two option Like Day/IOC It means when I bough for long which option should I choose?

Thanks

At what rate RIL trades is immaterial to you when your Call trades at 50/-, you can sell it at any time, here you would gain Rs.10/-X lot size!!!
Options can be squared off any time at market rates.
No idea about MOSL.
usually day order means your order will remain open till it is executed or end of day!! IOC=Immediate or cancel!!!, the order shall be filled as soon as you enter it , or it may trated as cancelled!!! Not very sure about it!!