How to Learn Options Trading Strategies in India

Posted by Kalpesh on October 19th, 2022

Trading options is considered one of the great methods for wealth maximization over the long term. If you are new in the options market, you might be wondering what options are, how you can learn all the basics, and what you should know about the options, and such questions might be crossing your mind.

We have covered all the necessary details in this article for your ease. After reading this article, you will be able to start your options trading and apply various option trading strategies on your own. 

First, understand what options are. Options are the contract between the buyer and seller to either buy or sell the underlying asset on any future date at a predefined price. These underlying assets can be stocks, indices, any commodity, etc. To enter into the contract, the buyer must pay the seller the premium.

As we know what options are, you should also be aware of various terms and jargon used in options trading. If I tell you the sequence to master the options trading, it would be as follow:

1. Understand what are options
2. What are the benefits of trading options
3. What is  the highest risk associated with options trading
4. What are the types of options; (call option and put options)
5. What Financial asset can be used for options trading (stock options, index options, commodity options, and currency options)
6. What do the terms - strike price, lot size, premium, and expiry date mean in the context of options trading?
7. What factors can influence the price of the premium paid for options
8. What are the various Options Greeks?
9. How to read and understand the options chain, chart, and graphs?
10. How to settle the call options and put options?
11. How to trade in options on the Option Trading Platform applying various options trading strategies?

So, this is the basic learning you need to do before jumping into the options.

Once you are clear with the theory, the next phase is to start applying it to the practical market.

You might have questions now, from where to learn this? It's very simple in today's time. Thanks to the technology to help us! If you are a person that can understand various concepts by merely reading them, you can opt for books, available in hardbound and also soft copy. If you need visuals also, I would say to choose the online or offline Best Option Trading Course in India.

How can you start trading in options?

Getting all the theory knowledge about the basics of options trading gets your half job done. Now is the time to implement what you have learned. It's time to start trade, but we have a few tips for you; please keep them in mind.

• You must have a Demat account linked to your bank account.
• If you already have a Demat account, ask your broker if you can trade options with that
• Next, you need the best planning to start your options trading. Take the help of your broker in the initial stage to draft the         strategy.
• You must have margin money to start trading options.
• Even though you have good enough money, do not invest it all; try with smaller chunks.
• Learn various options strategiesfor different market scenarios.

Traders can do Options trading in two different methods: options day trading and options positions trading. So, based on your requirement and skills to trade, you may choose any of them.

According to the experts on options trading, there are a few options trading strategies that every trader must know. We are listing the names of those strategies; do comment in the comment section if you want a detailed article on any of the strategies specifically. They are as below:

1. Bull Call Spread
2. Bull put spread
3. Call ratio back spread
4. Synthetic call
5. Bear call spread
6. Bear put spread
7. Strips
8. Synthetic put
9. Straddles (long and short)
10. Strangles (long and short)
11. Butterfly (long and short)
12. Iron Condor (long and short)

There are more strategies than the ones mentioned above. But as a beginner, if you learn these many, you will be able to implement others easily.

If you are trading options in the Indian stock market, you must keep in mind some of the factors, such as

• Do not forget the target price
• Cut losses when in need
• Always choose the most liquid options
• Spare only 2 to 4 % of your capital in options
• Try to profit from the small market moves

Remember, in your initial stage; your goal should be learning. Once you get enough expertise in the options, you will definitely earn a huge profit.

We hope you found what you were looking for in options trading. If you have any questions or want to take a course, you can book a demo with us and get all the support needed from our experienced team members.