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Whatâs the link between PCR (Put-Call Ratio) extremes and Bollinger Band breakouts?
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Only 3 Hours to Go!
Meet Pratik Jain @P73405â our host for todayâs âF&O Trading Simplifiedâ session.
Pratik is a Research Analyst with 8 years of active experience in the financial markets, having worked across leading brokerage houses.
His core strength lies in technical analysis and interpreting market data to uncover meaningful insights. Over the years, he has seen how the right knowledge can create wealthâand how costly mistakes can destroy it.
Driven by a mission to spread financial awareness, Pratik helps people realise the true power of equity investments and guides them to avoid common pitfalls in trading.
The session goes live in just 3 hoursâdonât miss your chance to join the conversation!
I bought a call, the stock went up a little, but I still lost money. What did I miss? what went wrong?I am a beginer in options
What does âtime decayâ mean, and why does my option value drop overnight even if nothing happened in the market?
Whatâs the point of selling options when the profit is so small compared to buying?
Hey everyone⌠Super excited to begin with todays Q&A session ..
We would begin with the questions already posted and will answer the live questions as soon as we are done with the questions posted.
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@Nupur , as you asked on how to interpret open interest and use it for trading decision, the following may help.
Open interest tells you how many F&O contracts are currently active in the market. On its own, itâs just a number â the real value comes when you compare it with the price movement.
If the price is going up and OI is also increasing, it means fresh buying is happening and the uptrend has strength.
If the price is falling and OI is rising, it means fresh short positions are being built â traders are betting on further downside.
When price goes up but OI falls, thatâs short covering â sellers are closing positions, which can cause quick spikes.
When price drops and OI falls, thatâs long unwinding â buyers are exiting, which usually weakens the market further.
For example, if Nifty moves from 24,200 to 24,350 and OI in Nifty futures jumps, thatâs fresh buying. If at the same time, option data shows call positions being closed and puts being written at 24,200, itâs a strong sign the market sees that level as support.
to simplify â OI, when read with price action, helps you see whether the move has conviction or is just noise.
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@Prachi_Tahlani
you asked two questions and following may help for the same
- How do I decide whether to buy or sell an option?
Buy: Pay premium for calls (bullish) or puts (bearish). Risk capped; ~70-80% expire worthless.
Sell: Collect premium; obligated if exercised. For neutral/income strategies.
- what factors should I look at before taking a trade?
Your Market View (Outlook): If youâre feeling bullish (stockâs gonna climb), go for buying calls or selling puts to cash in. Bearish (expecting a drop)? Buy puts or sell calls. If itâs all meh and neutral, selling options can work 'cause you pocket the premium as time ticks away without big moves.
Time Decay : This oneâs a killer for buyers⌠your option loses value every day it sits there. But if youâre selling, itâs your best friend, eroding the optionâs worth in your favor.
Just pick an expiration date that matches what you think will happen; donât let it drag on too long if youâre buying.
Risk and Your Wallet : Buying keeps things safeâworst case, you only lose what you paid for the premium, perfect if youâre risk-averse or starting small. Selling? Itâs bolder, with potential for big losses (even unlimited), so you need a margin account and the stomach for it. Not for everyone.
Liquidity Check: Stick to options with lots of trading action and narrow bid-ask spreads so you donât get hosed on entry or exit prices.
@priya02
welcome to the world of F&O , it comes with wild swings and following answer may help you to make the journey bit smoother.
Top Risks in F&O for Newbies (+ Quick Fixes)
Leverage Amplifies Losses: Small moves wipe out capital. Solution: Use small positions.
High Volatility/Speed: Wild swings, fast decays. Solution: Set stop-losses.
Unlimited Risk: Losses can snowball endlessly. Solution: Buy defined-risk options.
Liquidity Issues: Hard to trade without slippage. Solution: Choose high-volume contracts.
Emotional Pitfalls: Greed/panic leads to bad calls. Solution: Follow a plan.
2)what do You need to keep in mind before I begin?
Learn Basics: Study Greeks, futures mechanics via NSE guides or books; practice paper trading.
Go Small: Risk only spare cash; start with low-risk buys, not naked sells.
Plan It Out: Use stop-losses, track trades, watch fees/taxes.
Know Rules: Understand expiries, settlements in India to avoid surprises.
@Tradertilok
Few strategies as a beginer you could start with (however no strategy is full proof ) but following are two or three leg strategies and are easy to execute and keep a close watch on are
- Bull spread 2)Bear spread 3) Credit spread 4) Iron condor 5) Butterfly
@Tradertilok
Nothing could be said as better as such. both comes with their own set of risk and rewards .
It all comes to risk management and discipline a person/trader follows during the process which makes it exciting or worrysome. hope it helps !! Happy trading ..
@Tradertilok ,
As far as I understand options, following should be strictly followed
- Understanding that in options trading, you need not just be right but Right within a set timeframe .
- By probability, option seller takes higher risk and have high probability to win
- Earnings play/earning (result) trade can be a good time if used properly to use trading opprtunities in favour .
@P73405 much appreciated. What tools do you use to plan your F&O trading? If you could help with any apps/research materials?
Also, appreciate you guys do these educational series. Is there any webinar or series of lecture I can follow?
to simplify in futures, you could make money either if the stock goes up or down (2 directions).
But when it comes to OPTIONS, you could get an opportunity (depending on the strategy used) in all 3 directions, ie, if the stock moves up or down (long or short), and at the same time even in sideways movement via neutral strategies to eat premium, one can use options.
Some rules I follow are:
No revenge trading in markets
Markets are supreme and not all your trades may work No matter what!
Its always good to stay hedged
Surviving in this game is more important for long run
Thanks for the appreciation. to answer your question in one line would be
Angel one app is a one stop solution for all you need from trading to investing and learning, from ETF to mutual fund etc
from news to derivatives to commodity .. a one stop solution
Its a proven stat that majority of option expire worthless (however selling naked option is highly risky) so should ideally be done with hedging .
this is why people prefer option selling expecially in far OTM options.
In options, one need not just to go right with dorection but also other factors need to be considered such as , Volatility, Cost of buying the contract (premium paid) , IV , Time to expiry etc .
so If you are an option buyer, you not just need to go right but also in less amount of time your desired move should occur