How to Trade in Nifty options for intraday gain?
Introduction: many people want to trade in option for intraday due to its low capital requirement and huge profit potentiality. However it is being experienced that the option buyers used to lose money very often. The reason is quite simple traders jump into the option trade without knowing the answer of the following questions. I will request you to find the answer of these questions then jump into the option trade for intraday. Certainly I will give you the valid mathematical answer for the below mentioned questions.
A. Which strike option to trade for intraday in nifty?
B. When to trade in options and when not to trader in options for intraday?
C. Use our binomial option calculator (only tool available in web till date)?
D. How to initiate option positional strategy?
Let us start the discussion from the 1st point "Which strike option to trade for intraday in nifty?" this method is not limited to nifty option it is useful to all stock options too.
While making a choice of strike to trade in option we often find the following problem.
A. Just In the money and at the money call options of nifty used to have high time value and has greater risk to trade for intraday.
B. Deep out of money options have less chance to appreciate in comparison to the just in the money options. Hence it is not suitable for intraday trade.
Simple mathematical approach to choose a right strike for trade:
a. Go to the www.NseIndia.com b. Click on the get quote under the future column
c. Get the quote for nifty d. In the bottom find the daily volatility
e. For 12th January it was 1.04 f. 11th closing price was 5256.10 as per the volatility principle explained by me in the article "Trade in nifty future intraday for making sure profit." now let us found the tradeing range for nifty for intraday and make the choice of strike for intraday which is explined in the next page. Click on the "which strike option to choose for intraday" you will be navigated to that page