Part3 Learn Instituitional Trading

Option Trading in India (NSE)
Popular Instruments:
Nifty 50 Options

Bank Nifty Options

Stock Options (like Reliance, HDFC Bank, Infosys)

FINNIFTY, MIDCPNIFTY

Lot Sizes:
Each option contract has a fixed lot size. For example, Nifty has a lot size of 50.

Margins:
If you buy options, you pay only the premium. But selling options requires high margins (due to unlimited risk).

Risks in Options Trading
While options are powerful, they carry specific risks:

1. Time Decay (Theta)
OTM options lose value fast as expiry nears.

2. Volatility Crush
A sudden drop in volatility (like post-earnings) can cause option premiums to collapse.

3. Illiquidity
Some stock options may have low volumes, making them harder to exit.

4. Assignment Risk
If you’ve sold options, especially ITM, you may be assigned early (in American-style options).

5. Unlimited Loss for Sellers
Option writers (sellers) face potentially unlimited loss (especially naked calls or puts).