Today (Monday – 15-Apr-24) is the day when INDIA VIX and Nifty behaved exactly as they are meant to be. INDIA VIX and Nifty are inversely proportional.
See the screenshot below. The time and source of the screenshot are inside the pic itself:
INDIA VIX Mon, 15-Apr-24
Nifty 50 Mon, 15-Apr-24
I have written about this earlier also. You can read them here:
India VIX is A Very Important Indicator of Overall Market Direction
How India VIX Is Calculated and What to Expect After Seeing High or Low India VIX
Impact on Nifty Bank Nifty India VIX due to General Elections 2019
How does INDIA VIX help in trading options?
You can get an idea. If INDIA VIX has risen from the previous day option premiums will likely increase giving a great opportunity to sell.
However, you need to hedge them else on paper you can suffer unlimited loss. But loss is only till you decide to take a stop loss. This means that option selling on paper has an unlimited loss – the real loss is when you take a stop loss or the max-margin blocked to sell option.
With hedging the maximum margin blocked will reduce by 75%. Naked option selling is dangerous. In a black swan event, a naked option seller may lose 100% capital deployed to sell the option.
Therefore you must always hedge options sold and all futures trading. Whether it is a future buy or sell trade – both on paper are unlimited losses. Again if you hedge futures with options the margin to trade futures will reduce by 75%.
You can do my course and learn strategies to hedge both options and futures.
Click to Share this website with your friends on WhatsApp
COPYRIGHT INFRINGEMENT: Any act of copying, reproducing or distributing any content in the site or newsletters, whether wholly or in part, for any purpose without my permission is strictly prohibited and shall be deemed to be copyright infringement.
INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However, every trade depends on the trader and his level of risk-taking capability, knowledge and experience. Moreover, stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website.
DISCLAIMER: I am NOT an Investment Adviser (IA). I do not give tips or advisory services by SMS, Email, WhatsApp or any other forms of social media. I strictly adhere to the laws of my country. I only offer education for free on finance, risk management & investments in stock markets through the articles on this website. You must consult an authorized Investment Adviser (IA) or do thorough research before investing in any stock or derivative using any strategy given on this website. I am not responsible for any investment decision you take after reading an article on this website. Click here to read the disclaimer in full.
My student gets the Winner's Certificate of Zerodha 60-day Challenge - Click here and Open Stock Buy and Sell Free Account with Them Today!!!
Testimonial by a Technical Analyst an Expert Trader - Results may vary for users
60% Profit Using Just Strategy 1 In A Financial Year – Results may vary for users
Testimonial by Housewife Trader - Results may vary for users