Article Date: Monday, 27 August 2018

Many traders and investors must be wondering why Nifty 50 (NSE) is rising continuously since last one year. Here is the chart:

NSE 24-Aug-17 to 24-Aug-18

52 Week High and Low:

Percentage Increase (20.39%):

Some important notes before you read further:

NIFTY 50 is a diversified 50 stock index accounting for 12 sectors of the economy. It is used for a variety of purposes such as bench-marking fund portfolios, index based derivatives and index funds. NIFTY 50 is owned and managed by NSE Indices Limited (formerly known as India Index Services & Products Limited) (NSE Indices). NSE Indices is India’s specialised company focused upon the index as a core product.

Source: https://www1.nseindia.com/products/content/equities/indices/nifty_50.htm

Basically Nifty tracks the market performance of 50 largest cap companies’ stocks of india, and hence, broadly reflects the sense of the Indian economy.

Is NSE (National Stock Exchange) same as Nifty 50?

No. Nifty 50 is a collection of large cap or in other words very big companies which may not collapse. NSE is a stock exchange where thousands of companies stocks are traded – bought and sold. NSE has more than 1,600 companies listed on its platform. Nifty is a collection of 50 large companies which are traded in NSE.

Similarly BSE (Bombay Stock Exchange) is also a stock exchange just like NSE where shares can be bought and sold for companies listed there. There are about 5,000 listed companies in the BSE.

If you check the difference approximately 3000+ companies are not listed in NSE, hence not traded in NSE. Thousands of companies are listed in both BSE and NSE. If you want to buy stocks of a company listed in BSE but not listed in NSE – you have to buy from BSE exchange only and sell in BSE exchange only. You cannot buy a stock listed in BSE and sell in NSE, if not listed there.

Companies listed in both NSE and BSE can be bought from one exchange and sold in another and vice versa. But this cannot be done intraday. Means you cannot buy a share in BSE and sell in NSE and vice versa the same day. This is arbitrage and hence not allowed.

Full form of NIFTY is “National Stock Exchange Fifty”. When you want to see chart of NSE you will end up seeing charts of NIFTY everywhere. In fact you will see NIFTY being branded as The National Stock Exchange (NSE). Fact is NIFTY is only a part of NSE but index of NSE is calculated based on NIFTY, therefore when you search for chart of NSE you end up seeing chart of Nifty 50.

People get confused thinking its NSE chart. Market apps and websites show the Nifty 50 chart and brand it as NSE. It’s not wrong as Nifty 50 is most popular and most traded index derivative (future and option).

Now coming to the question of why NIFTY is rising since last one year. If the stocks in the Nifty 50 rise then NSE will also rise.

See list of stocks in NIFTY 50 that have risen the most in last one year (from Aug 2017 to Aug 2018):

Top Nifty 50 Companies Aug 2017 to Aug 2018

Source: https://economictimes.indiatimes.com/marketstats/company-true,exchange-50,indexid-2369,indexname-Nifty%2050,pageno-1,pid-37,sortby-yearlyPercentageChange,sortorder-desc.cms

Please note that by the time you see the list may change.

You can see that the top companies have risen approx 30-70%, but NIFTY has risen 20.39%. Why only 20.39%, why not 50%? Here are companies that gave a negative return in the same period in NIFTY 50:

Negative return companies NIFTY 50 Aug-2017 to Aug-2018

On top of that some companies are given more weightage in evaluating the price of NIFTY. So if all the averages are taken along with the weightages of these 50 companies you will see that it’s a 20.39% rise only.

Some more information on Nifty calculation:

Base year of NSE is 1995 and base value is 1000.20. NIFTY is calculated based on 50 stocks. List of 50 stocks can be found here.

The main difference between SENSEX and Nifty is that SENSEX is the stock market index for BSE Limited, while Nifty is the stock market index for National Stock Exchange (NSE). SENSEX is comprised of 30 stocks, while Nifty is comprised of 50 stocks.

Everyone wants to trade and make money fast – this is fine, but everyone is looking to make a home run expecting to make 10-15% per trade. In this post you will learn that 10-15% per trade is impossible to make.

To try to make 10% a trade, a lot of gambling in stock market is going on and the result is obvious – they lose money. They just do not know what to trade and how to trade so they gamble. Stock markets do not work that way.

Actually its not their fault – there are a lot of misleading things happening online and offline. This is screenshot of a person taking an offline course in derivatives. See his fees (he promises huge returns from a single trade – more than 100%):

Of course please do not ask me the name – I will not reveal. Due to the greed of making xxx returns in a single trade I am sure a lot of people pay him for the course and repent.

Please note that such returns are impossible to make in stock markets – please do not fall in such traps.

Coming to some real returns from the stock markets. Lots of people believe stock trading can give unlimited profits. Please check facts on the ground. How many traders have made over 40% consistently for 10 years? Not a single retail trader till now. Yes some hedge fund managers have made good returns but if you average them out to three years the highest return is only 26.21% CAGR. Only the top 4 funds were able to clock over 20% annual return for three years. Here is the proof – list of top 100 hedge funds:

https://www.barrons.com/articles/penta-top-100-hedge-funds-1497665963

Here is the screen shot in case the website cease to exist:

Top 100 Hedge Funds

In other words if you make over 20% return consistently per year, your portfolio return will be inline with the best fund managers in the world. Expecting anything over 40-50% every year is expecting something that is NOT happening in this world of stock markets. My course will help you to make over 20% yearly returns consistently. This is a realistic expectation and possible. In fact returns up to 30% a year is possible from the bank nifty course due to its aggressive nature, but anything over that I do not promise. It will totally depend on your capabilities as a trader.

Here is one such trader who has made very good return in one financial year after doing my course:

60% Profit Using Just Strategy 1 In A Financial Year – Results may vary for users – Such a return is not possible every year.

Another problem is tip providers. They also promise huge. They call on you mobile and tell they can help you make a lot of money trading Intraday. They promise 2000-3000 everyday with 30000 capital. Really? That’s pretty insane.

I have just explained above that making over 40% consistently for 10 years is impossible. At least in today’s world no fund manager has done. Proof given above. Now 2000 profit on 30000 is a return of 6.66% in a day. This is 146.66% in 22 trading days in a month, which converts to 1760% in one year.

I will not say anything more than this. If someone is looking to make 1760% in a year from share markets then either they do not know how the stock markets work or they are an easy prey of tips providers. Its people like them who can be easily fooled by tip providers. If you do not believe me pay any tip provider and see how they will make sure you lose money trading intraday. Well even I am a victim of tip providers.

Moreover why do you want to take tips? Do you have no interest to learn to trade yourself? And for how long you want to depend on tips?

What I am trying to say is first think about saving your money while trading. Capital protection should come first – not capital appreciation. If you are trading with proper hedge then you are giving priority to capital protection – capital appreciation will also happen but slowly. My course is liked by many traders because I teach them what actually works in stock markets and how to protect their capital first. I teach them to be very conservative with their trades so that if there is a loss it does not pinch their pockets and of course the profits will be small but consistent.

These are the courses I offer:

Nifty Conservative Option Trading Course:

The above course is good if you have just started trading options. You do not need to see any charts,or you do not need to know any technical knowledge. You do not even need to constantly monitor the trades. And the best part is you do not need to try to find the direction of Nifty. Its 100% non directional and very conservatively hedging strategy. Approx 1 lakh 10 thousand is required to trade the strategy.

Bank Nifty Weekly Option Aggressive Strategies Course:

This course is good for advanced trading or in other words professional trading. These are high risk and high reward strategies with 100% aggressive hedging. If you want to trade aggressively futures and options you can do the bank nifty course. Here too technical charts are not required but slightly more monitoring is required than the Nifty strategy. There is one intraday strategy in this course. All other strategies are positional in Nifty and Bank Nifty. One strategy of Bank Nifty can be traded in stocks. Minimum required is 70-80k in the strategies.

If you are ok with reasonable and consistent returns you can do my course. If not, tomorrow when you lose a lot of money doing speculative/gambling trading you will realize the mistake of not doing my course earlier. You can find the fees and payment links in this page to enroll for the course:
https://www.theoptioncourse.com/bank-details/

If you enroll for the course do let me know. I will send you the materials to read today.

If you trade a stock intraday make sure to trade with at-least 5-6 lots to scale the position, or if you do not have that much money to buy so many lot futures, trade in cash. Here is how to scale out of your Intraday trading:

Decide your trade long or short by 11 am

Its not just about deciding the long or short its also about deciding the profit taking and stop loss for the day. Please note that stop loss/profits should be decided on the basis of how much you are willing to lose and take from a trade not what your system is saying. Your system does not know your worth or your financial situation, so do not leave it to the system.

This is unlike what the person who sold you a trading software must have told you – but this is for your benefit.

Now coming to how to scale out. It is one of the best ways to enter and exit positions for day trading in the stock market in my opinion. Scaling out is selling only a part of your intraday holding and keep the rest at entry point or next level.

By learning this way of taking out positions in a step by step manner you can make very good profits some days and small loss the other days.

You will never know when a big move is coming – so you must scale out partially. Once even a small profit is booked for rest of the trade you must move your stop loss to the original buy/sell position. Then if the second step is captured (means second step of profit booking) then move your stop loss to the first level of profit booking for the rest of the trade.

Please note that since you are keeping two levels of profit booking and stop loss in the system – you will need 2X (double) the margin.

Do not worry about the margin – worry about the profit or losses.

This way your loss will be fixed for every trade but you can make very big gains when the stock goes in your favor. I

Move Your Stop Up After Taking Partial Profits – Do Not Change Your Plan Whatsoever Happens

I have seen that some traders change their initial plan when they see Mark-to-market (MTM) losses in the trade. This is a trade – its not a FD (Fixed Deposit) – you may see a small loss or small profit from the very next second. Do not panic and close the trade. Let the system and your planning take care.

If you keep one stop loss and one profit booking level then sometimes you will see that the trade was in profit but the stock reversed and hits the stop loss. This problem can be solved by scaling out of positions at different levels.

One of the biggest benefits of scaling when you are doing intra day trading is that it allows you to realize profits when you have them while still keeping some of your position in the stock to capture a bigger move if they come.

When you get a good gain its always better to capture that gain instead of leaving it for a bigger gain.

Once you sell some shares, you can move your stop up and ensure that no matter what, you will have a green trade.

You Can Move Up Your Profit Taking Levels

After your first target is met and if the stock has crossed 50% path between the first target and second target then you can move your stop loss to slightly higher position than the first profit taking level to ensure more profits. However this is a very intelligent move and can be done only if the gap between the profit taking levels are big. In small gaps do not do this as it may soon hit the stop level.

On Strong Days Let The Stock Decide Profits

After capturing 2-3 levels of profit some days you will see that the stock is moving very strong then in that case you may only keep the stop loss at the first profit level or your average price and let the stock decide where it wants to be at the end of trading day. Let your RM (relationship manager) close the trade automatically just before the closing bell. However this can be done by experienced traders only – if you are not very experienced please ignore this step.

If Scaling Is A Problem Make A Good Exit Strategy

For some traders who are busy and cannot monitor the trades for them its is recommended to keep one stop loss and one profit taking level. Moving up and down the profit and stop levels needs your attention. So if you cannot monitor the trades full time because you have a job then just keep a stop loss and profit taking levels in the system and leave for your job. But please note that once a target is achieved you will have to cancel the other trade in the system, else it may get executed.

In this one stop loss and one profit taking level make sure to keep stop half or your profit taking level. For example you want to earn 10 points in a stock then keep 5 points as stop loss in the system. This way if you are profitable even 50% of the times you will gain not lose in intraday trading.

Post date: 20-08-18

NSE Mar-Aug 18

Due to the recent turkey news you may have gone short in Nifty. In that case its better to exit or hedge your position.

If you are long then book profits.

Then wait for the trend to be clear.

India VIX is on the rise indicating volatility in the markets.

India VIX 20-08-18

Its strange that during these times so called market experts have different opinion – some say nifty will go up and hit 12000 by December 18, and some say Nifty may fall.

I am sure you may also be confused as what to do.

My advice do not listen to what the experts say in business channels or websites that you read. Tips or free advice both are bad and will be in your favor 40% of the times – rest of the the times you will lose money.

I have been telling you time and again. Learn to trade yourself. See your contract notes and check why you failed when you failed and why you succeeded when you succeeded.

This will help you to become a better trader.

Newsletter date: 09-August-2018

According to news sources NSE has applied for extending equity derivatives trading hours till midnight from 1 Oct 2018.

If you do not know this news let me take back to a news sometime back in May, 2018. SEBI proposed a committee to look into extension of trading hours and finally in May 18 it gave a nod. You can read the news here:

https://www.business-standard.com/article/markets/sebi-allows-exchanges-to-extend-trading-in-derivatives-till-11-55-pm-118050400653_1.html

http://www.zeebiz.com/india/news-sebi-extends-market-trading-hours-heres-what-experts-say-45795

And now in Aug, 18 NSE has applied for extension of timings of derivatives trading hours till midnight from 1 Oct 2018.

Trading Timing of NSE from 01-Oct-18:

Normal Cash Segment (Equity) : 9.15 am to 3.30 pm

Derivative (Futures & Options) 9.15 am to 3.30 pm – break – 5.00 pm to 11.55 pm.

This is good news for wining traders but very bad news for losing traders.

It is a high probability that if Nifty has applied then SEBI will approve it. BSE will obviously follow suit.

From 1-Oct-18 surviving without hedging will become impossible.

Lets assume a trader takes a trade in fist session (9-3) and loses money. He/She will obviously go for revenge trading in the second session (5-12), and lose more. Next day the story will continue.

And if you win you might try another shot in the second session – and will end up losing what you won that day. 🙁

Life is going to be difficult for traders who cannot control their emotions to trade, who do not trade with hedge, who trade without a plan, who trade on tips & who trade on speculation.

If you are reading this before 01-Oct-18 you will see this coming true after 01-Oct-18. And if you are reading this after 01-Oct-18, you will agree.

That’s the reason we should trade equity or commodity derivatives (futures and options) without any bias or direction and we should trade with hedge for protection.

My nifty course teaches proper hedging methods of monthly income with peace of mind. Its better to hedge and trade and be happy with a small but significant monthly income. With hedging there will not be any home runs, but your profits will start accumulating slowly to become big at a later date.

Look at BSE/NSE chart on 23-Jul-18 at around 1 pm – what trade an intraday trader would take? Buy or Sell?

Look at the ups and downs throughout the session. It’s up then down then up. I am sure even the algo-trading systems must be confused.

These choppy directionless trading days are most difficult for traders. These are not abnormal days. It happens 75% of the times. Only 25 trading days in 100 trading days have a clear direction. Rest 75 days the markets do not show any direction.

This is the reason I made a non-directional Nifty course. Our trades wins 75% of the times that too with peace of mind as they are fully hedged. You do not even have to check/monitor them continuously.

See these actual reaction of someone who did my course:

My course subscriber happy with tension-less trading strategies

These are the things you can do on choppy direction less market days:

1. Do Not Trade:

If you cannot figure out what to trade the best way to trade is sit and relax. No one is forcing you to trade. If the direction is not clear there is a 90% chance that your trade will hit a stop loss. So it’s better to avoid trading on days when the direction is not very clear. On these days check your previous trade records and see if they teach you something.

Learning from your own mistakes or mistakes of others is the best teacher of living a good life, trading, managing money etc. So do not waste time just go and check your own bad trades especially on choppy days.

2. Do Not Do Revenge Trading:

If you lost money on your last trade on a trending day it does not mean you should take a revenge trade on a non-trending choppy day. Remember your current trade has nothing to do with your past trades. Only you know your losses – Nifty or any other stock does not. So no revenge trading on a choppy day. Be ready to lose more.

One of the biggest causes of failure for new traders is not being able to maintain a positive results with their trading. Most traders make one month profitable then the next month loss exceeds the profits made in last month.

Consistency is very important in trading results. Even if you win 50% of the times, you can change your risk-reward ratio to make sure you win more than you lose and you maintain a consistency. If you do not maintain a consistency you will be in huge problem/debt one day.

You must be able to be profitable over a longer period of time only then you can try to be a full time trader.

3. Do Not Jump Stocks:

On a choppy day it is seen that most traders will jump from one stock to another seeing no movement. This is basically entering into a trade, then taking a stop loss, then entering into another trade, then taking a stop loss, then entering into another trade, then taking a stop loss. Do not forget that by closing and opening another trade you are paying brokerages, taxes etc. Jumping stocks trying to find a good stock to trade will take you nowhere.

If you do not have a proper trading plan or no good strategy, you will jump from one plan to another.

It is very easy to deviate from your strategy in choppy markets (like the overall market has been the past few months). Do not deviate from your strategy unless you get your profit or your stop loss is hit.

4. Do Not Do Adjustments if Not in Plan:

Most traders gets emotional when seeing a loss and adjust their trades which is not according to the original plan. Adjustments without proper plan will lead to more losses.

5. Do Not Take A Trade If You Are Not Sure Yourself:

If you have any doubt whether a trade is worth taking or not, just imagine telling your mom the setup of the trade. If you feel she will get confused do not trade.

In choppy markets traders overthink. Do not overthink or over complicate your trading.

An uptrend is an obvious series of higher highs and higher lows. A downtrend is the opposite. If you cannot tell whether a stock is in uptrend or downtrend – you will almost certainly get chopped up if you trade it.

6. Be Patient and Wait for Trend to Come:

You never know when a good trading opportunity will appear. No one can control trading opportunities. Therefore it’s good to be patient and wait for the right time to trade.

I can understand that staying away from markets is tough so on these days you can study your own trades and research on trading styles.

If you follow the above rules the choppy market days will not take your money away.

A lot of people are now moving towards what traders are trying to do in US, UK and other developed nation – Algorithmic and Quantitative Trading.

So I thought let me write a quick post and tell you what it is.

Algorithmic trading is basically done by machines. You must be thinking – wow machines who do not have any emotions of greed and fear – wow they will make a lot of money trading on formulas.

I have made formulas in bold. WHY? Because this is the most important part of Algorithmic Trading.

Who will write the formula? And what formula – what exactly is the strategy?

This is where Algorithmic and Quantitative Trading fails. On top of that paying a monthly fees to trade will reduce the profits. And what if your account takes a BIG LOSS? Will you blame the machines or yourself?

Read these huge Algorithmic and Quantitative Trading failures:

High-frequency trading and the $440m mistake

How one bad algorithm cost traders $440m

Interactive Brokers fined $4.5 million for algo trading system failures

Concerns over risk in Algorithm trading

And this in our own country:

Sebi sends NSE final show cause notice in algo-trading case

So my request is do not try something that has not be proven yet to be successful in the long run. If something goes wrong it can cost a lot of money.

I am telling this since years:

DO NOT LOOK FOR HOME RUN EVERYTIME YOU TRADE – JUST HEDGE YOUR TRADES AND LOOK FOR SMALL PROFITS CONSISTENTLY.

If you can succeed in taking small profits home consistently you can grow your trading account big in months and years to come. Think 3-5 years from now – not today, tomorrow or this month.

The motto of my Nifty and Bank Nifty courses are the same – learn to hedge and take small profits home. Do not care for the noise that goes on in Internet, media, social media like Telegram, Whatsapp etc, Algo trading talks, business channels in TV etc.

All these are just noise.

Just think about this simple investment – invest in SBI and keep it for 5 years. What do you think will happen? One thing is certain you will make at least 10% a year or more. Is this Algorithmic Trading? NO – Is this any Technical Analysis – NO. Is this any Price Action – NO. Is this any Bollinger Band, Candle Stick Charts, Cup & Handle Pattern – NO NOTHING.

So What It Is? It is KISS – KEEP IT SIMPLE STUPID.

Yes my strategies are just that – invest in options – hedge it and when it is making money – exit. Simple. No extraordinary adjustments – price action – regular watching etc. But it does work because the logic is strong and it works.

You can enroll for the courses here.

Date: Wed, Jul 18, 2018

Nifty saw a resistance at 11000. Resistance at 11,000 is a Huge Psychological Resistance At Play in Nifty.

I hope you know that Nifty does not move depending on the derivatives markets – it is totally depended on the Nifty 50 stocks:
https://www.moneycontrol.com/markets/indian-indices/?ind_id=9
https://economictimes.indiatimes.com/indices/nifty_50_companies

On top of that not all stocks have the same weightage on Nifty. Some have more some less.

I am sure you may be surprised that currently some stocks are below their level when Nifty was at 10,500 a few days back. Today its at 11,000 still many Nifty 50 stocks and others too are below what they were when Nifty was at 10500.

These are some of the stocks that are down:

ICICI Bank, Canara Bank, SBI, VEDL, Tata Steel, Tata Motors, Titan, HPCL, IOC, PFC, REC, SAIL, PNB, BOB, Sun TV, Ashok Leyland, LIC etc.

And the case with mid-caps is even worse. 🙁

Investors who invested in mid-caps a few months back must be getting frustrated and may press the panic button (take a stop loss/sell). This will ensure some of the mid-caps will fall further.

So if you are planning to buy stocks now, do not buy mid-caps. Wait for a clear reversal, then buy.

Fact is these things will continue in stock markets. Buy and Hold for years is now a dead policy. Its better to book profits and reinvest in other good stocks.

Fact is only options that too non-directional trading can make a regular income, monthly income, yearly income. Even if Nifty goes from 11000 to 10000 and then again comes back to 11000 – people who know options non-directional strategies can make regular income.

Why? Because options can go from 10 to 100 in minutes and come back from 100 to 10 and expire worthless. If a good traders can understand the logic of options – means what to buy/sell and when and properly hedge it – they will ba able to make a monthly income.

Once you do my course you will realize what I am saying is true. On top of that there in no tension involved. It is a slow process of making a monthly income but it makes – month after month – year after year.

You cannot decide direction of a stock every-time you trade – so its better to be a non-directional trader and keep making profits whatever it is consistently.

You can enroll for my nifty and bank nifty courses here.

Losing money in stock market trading is common but when I come across heavy losers, I write in my blog.

Some examples are 3 crore loss, 2 crore loss, 40 lakh loss (must read) and now this 60 lakh loss. The total loss of these four traders equals 6 CRORE.

Read this WhatsApp chat:

Yes, I feel bad when someone says he/she lost money trading the stock markets. Well if you start a business without knowing the ins and outs of business you are sure to lose money. But then somewhere sense should prevail. You must stop trading and start researching.

Not investing in stock markets is also a big loss. A Fixed Deposit in a bank fetches a mere 5-6% annual return a year. If you bring inflation into account you are just making a 1% return a year. So it’s not a loss but neither any profit. Therefore investing in stock markets is important but you must know what you are doing – DO NOT INVEST BLINDLY just because someone said it on TV or someone gave you a tip.

You must be an investor come trader. This means you must first invest in stocks for the long term, then ask for collateral margin on the stocks you hold from your broker and then from that money trader options. If you are doing it well everything will make money – the investments, the trades etc. You will be very happy with what your investments are doing.

This is proper portfolio management. Try to make whatever cent you can make from the markets.

Be diversified, hedge, and trader with lower brokerages – save and make money BOTH are important.

I manage my portfolio in a very disciplined way. I follow the 25-25-25-25 rule to manage my financial portfolio and every 6 months I re-balance. This is very important to make sure all eggs are not in one basket.

I agree that saying is different than implementing, but you have to start somewhere. So if you are reading this article I suggest you open an xl sheet and write down your savings till now, and then see how you can diversify.

You must know the basics of everything – financial management, all investments opportunities in India – which is good which is bad – for example investing in ULIPs (Unit-Linked Insurance Plan) is bad, how to choose good mutual funds and stocks and how to invest in them, how to trade options and futures with a hedge.

If you follow just the basics of financial management I can assure you that you will NOT see losses in any financial year. The kind of losses you are seeing above was due to FINANCIAL MISMANAGEMENT.

There is no need to try to be the next Warren Buffett or Rakesh Jhunjhunwala – just make sure you DO NOT LOSE MONEY TRADING, MAKE AT LEAST 20% PER YEAR IN YOUR TRADING ACCOUNT AND NEVER TAKE A BAD FINANCIAL DECISION OR MAKE A BAD INVESTMENT.

If you can just manage your financials the way I have written above you will live a happy life.

And I hope you live a happy life managing your financials well.

Update: Tuesday, 05-Apr-2022:

After reading the above post a reader Mr Navneet Yadav sent me an email. Since it’s a piece of important information I am adding it to this article.

His question:

Dear Sir,

I SHORT SBI APRIL’22 520 CE AND BUY SBI APRIL’22 530 CE

Now:

1) If on the expiry day for some reason I do not square off both the trades then what will happen, and,
2) If there are no sellers and buyers on the expiry day of both the strikes then what will happen?

Thanks,
Navneet

My answer:

If both are Out of Money (OTM) – both the options expire worthless – nothing will happen.
Profit/loss is all yours.

If both are In The Money (ITM) – one sets off the other – so nothing happens and cash settlement is done.
Profit/loss is all yours.

But if SBI finishes between 520 AND 530 on the expiry day then – the buy option is Out of Money (OTM) and expires worthless, but the short call is In The Money (ITM).

How are positions settled which are In The Money (ITM) on expiry day in all stocks in India?

On expiry, various F&O contracts are settled in the following manner if they are In The Money (ITM) once the markets are closed for trading:

• Take Delivery (stocks are delivered to your Demat account) – Long Futures, Long In The Money (ITM) CALL and short In The Money (ITM) PUT
• Give Delivery (you are required to deliver the stocks to the exchange) – Short Futures, Short In The Money (ITM) CALL and Long In The Money (ITM) PUT
• Only In The Money (ITM) options will be physically settled, if the option expires Out of Money (OTM), they expire worthlessly and there won’t be any delivery obligation.

2) If there are no sellers and buyers on the expiry day of both the strikes then what will happen?

It’s not possible as your position is open, so one more position is also open.
If you both chose not to close the above will happen.

If you too have any questions you can email dilip@theoptioncourse.com or just write in the comment section below. I reply to each email/comment.