new to options trading

[vedamoorthy]

good morning friends

earlier i was trading in equities, now i am interested in option trading also, i had read many articles about options trading, but pratically never traded it.i am having many doubts in that i am listing them, kindly clarify the same and help in trading options.
1. How to read options order book ? for example if we look for NIFTY (as on 20jan 2011), Expiry date 27JAN2011 strike price CE 5700.00.
it shows these details like ....

'''Price Information
Open Price 39.80
High Price 82.00
Low Price 26.20
Last Price 68.50
Prev Close 52.80
Close Price -
Change from prev close 15.70
% Change from prev close -
VWAP 50.03
Underlying Value 5710.65 ''........

what does this ''open price, high price, last price'' etc mean ? how does they vary ?
kindly clarify the same.

2. how to check the premium amount in options ?
kindly clarify the same and help me in trading options

thanking you..

 

[tvrssvk]

Wait for sometime AW10 will pitch in..............

 

[nvaz51000]

read articles on investopedia and find a basic book. try to read the derivatives page of the newspaper to understand the basic concepts like strike expiry call put premium. the price traded is the premium

 

[sumeetsj]

1. The open, high, low, close varies according to the movement in the underlying and how far or near is the strike price of the option.

2. Premiums of options can be checked here:
http://www.nseindia.com/marketinfo/...strument=-&date=-&segmentLink=5&symbolCount=2

 

[vedamoorthy]

thank you for our valuable reply sir, i am also having few more doubts,an i am again listing them, kindly clarify them also..
1. What is difference between ''Exercising an option'' and ''Squaring off an option''...?

2. When can this '' Exercising'' can be done in options, is it done only on Expiry date or can it be done at all trading days ... ?

kindly clarify the same,


thanking you

 

[sumeetsj]

thank you for our valuable reply sir, i am also having few more doubts,an i am again listing them, kindly clarify them also..
1. What is difference between ''Exercising an option'' and ''Squaring off an option''...?

2. When can this '' Exercising'' can be done in options, is it done only on Expiry date or can it be done at all trading days ... ?

kindly clarify the same,


thanking you

Exercising can only be done on the expiry day as all options are now European(as in CE and PE) options in Indian markets.
Squaring of means selling the option for whatever premium its trading at in the market.

 

[AW10]

Vedamoorthy, Welcome to the world of options trading.
Your questions are valid one and sumeetsj has already replied to them.
Please check out following post that I have written for people like you. It also gives pointer to some free resources on the web to learn about it.

http://www.traderji.com/options/305...ading-strategy-option-spreads.html#post333547

Once you go thru some material, you will get solid foundation of options trading. You can always come back to TJ for clarification/ question where memebers will help you out.

Hope your stock trading has been consistently profitable. Successful option trading has few more variables to address hence do focus on getting the grip of them first. And once you master them, you will never go back to stocks.

Happy learning.

 

[DanPickUp]

Hi Vedamoorthy

Choose your option teachers wisely ! I will now only present traders, which trade options. There are many more in the forum which trade futures and stocks.

The ones I mention here are some of the most well known option traders and I wish, I did not forget any. If so, give me a PM and I will expand this list. There are many more, which post there real trades and are clever option traders. Again : The one I mention here, TEACH about options. This, just to clarify for the other ones I did not mention.

AW10 and Smart-trade are very clever, helpful and very specific in there answers.

Sumeetsj is a very friendly option trader and knows a lot about options.

Tnsn2345 is the one, which likes the biggest risk and endless arguing. Still, there is a lot he can teach you.

TraderJunky is the only one at the moment, which present an option trading system here in Traderji.

Capricorn is a ghost and a real clever option trader. He was reading the most difficult books about option strategies. ( Mc Millan on option, for example )

Ghoshy is the one, which gives you market levels day per day. His calculations are a secret and still he provides his results every day.

Tvrssvk is in the background and will be present, when ever needed. By the way an other good friend of mine.

Stock Murtaza and Savant Gurarde are also pros in shares and futures. They are very strait and some times very funny in there post. So, do not get afraid, when posting with them.

Take care

DanPickUp

 

[sumeetsj]

Very modest of you DanPickUp..

But all I can say is more than 70% of my knowledge about Options/Markets and most important of all trading pshycy has come from this Forum.
And everyone listed by DanPickUp are responsible in making this forum what it is. (Here i apologize if I have left some names).
These are the Giants,
Sir Issac Newton said - If I have seen further it is only by standing on the shoulders of giants.
Its because of the contributors in the forum I am what I am today.
Thank you.

 

[tnsn2345]

...

Hope your stock trading has been consistently profitable. Successful option trading has few more variables to address hence do focus on getting the grip of them first. And once you master them, you will never go back to stocks.

Happy learning.

Dear V'Moorthy and other Options newbies,

I endorse AW's below statement without edit....

And once you master them, you will never go back to stocks.

...caution newbies with the below statement....

Even if you don't master them, you will never go back to stocks. Because losses from Options trading can hardly be recovered from stocks trading. (Maybe I am exaggerating).

....and underlining AW's below statement purposely to make it more emphatic...

Hope your stock trading has been consistently profitable.

With above disclosers / disclaimers...welcome aboard.

Regards,