How to handle option trading in expiry week ?

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The most common expiry trading strategy used is to buy options with multiple strike prices. This will increase the chance the stock will move in their favor and expire in the money before expiration. Usually, the options premium is very cheap due to time decay.

3 simple rules to follow in expiry week while trading options

1.) Tighten the horizons as much as you can
2.) Avoid carry forward of single long option trade into next session, and
3.) Select slightly in the money strikes especially towards the end of the day

For a bullish view, sell 2 higher strike calls for every call bought. For a bearish view, sell two lower strikes puts for every put bought.Make sure there is at least a difference of two strikes between the ones bought and sold and there is an absolute stop loss mechanism deployed as an exit strategy.

What's the difference between call options and put options?

For the beginner options trader, think of calls as securities that allow you to make a bet that a stock or index price will move UP past a certain level in the near future. And think of put options as securities that allow you to make a bet that a stock or index price will FALL below a certain level in the near future.

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Futures vs Options: What's the Difference?

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Futures and options are both financial instruments used to profit on, or hedge against, the price movement of commodities or other investments. The key difference between the two is that futures require the contract holder to buy the underlying asset on a specific date in the future, while options — as the name implies — give the contract holder the option of whether to execute the contract. That difference has an impact on how futures and options are traded and priced and how investors can use them to make money.

Future- When someone refers to "futures," they're really referring to futures contracts. A futures contract says a contract holder will buy the underlying asset on a certain date regardless of the asset's market price at that time. They agree to a price when they purchase the contract. The underlying asset could be a physical commodity like corn or oil or another financial instrument such as stocks. When you buy a futures contract, your broker won't require you to stake the entire value of the contract. Instead, you'll only have to hold a small percentage of the cash needed for the purchase, which is called an initial margin payment. The price of the contract will fluctuate. If you, as the contract holder, are showing too big of a loss, your broker may require you to deposit more money.

Option- The underlying asset is another financial instrument such as a stock, bond, or even a futures contract. A standard stock option is for 100 shares of the underlying stock. Options for commodities futures use the same standard units as the futures.
When you buy an option, you pay a premium for the option. This is usually just a small amount relative to the strike price of the contract. As an options buyer, this is the most you have at risk. An options contract can never be worth less than $0. 

What are Nifty Options?

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Before understanding nifty options, first we need to understand what an option instrument is.

Just like derivatives futures, options too is an derivative product where the buyer holds a right to execute option of either buying or selling of shares or another underlying at a certain pre-determined price (also known as the strike price) during a pre-determined time period. The 2 types of Options are Call Options i.e. The Right to Buy and Put Options i.e. The Right to Sell.A Call option gives buyer an option to “BUY” underlying asset at an agreed upon price with a expiry date on this contract. Likewise Put gives buyer an option to “SELL” at agree upon price with a expiry date on this contract. Hence, Call buyer would want prices of the underlying to go up and put buyers would like to see prices of underlying falling.
Lot size of Nifty Options – 50 (Subject to revision from time to time)

How to find Stock for long run

 

5 step approach for great stock picking

Crisp summary of the Warren Buffet way would act as an important guide to start with.

• Approach stock purchases as buying a business rather than just a stock purchase in the portfolio.
• Evaluate the true worth of the business considering the future earning potential
• The margin of safety is the real risk containment measure and not stop loss
• Turnaround seldom turns and therefore Invest in great businesses that are generating free cash flows
• Invest for the long term to generate inflation-adjusted superior returns.