[00:00] When you are planning to buy options in stock market, According to previous resistance, you expect the market to go up to 18300.
[00:15] you think that market will move 300 points,18300, Or will you buy calls of 17800 or 17700? If the market is close to 18000 and it is going to 18300,
[00:30] Or will you buy calls of 18100, 200 or 300? which put will you buy? so in which case, which strike price will be profitable?
[00:46] Friends, the main purpose of making this video is to talk about option buying. Instead of option selling, if we enter option buying, People who sell options are buying too.
[01:01] The options to get out are also giving good profits. Since they are showing huge interest in option buying,
[01:13] if they follow the steps related to option buying. is option selling better or option buying better? Option selling, I don't doubt it.
[01:29] I am explained many strategies and techniques related to option selling but if you still want to do option buying or if you are required to buy options in some situation,
[01:41] If you have this question, select option selling. I told you in the previous video that you will lose if you buy options without knowing it.
[01:55] I also told you that we should make a detailed video Since you told us to do it, Okay, shall we start our video?
[02:09] if you think our efforts related to videos are valuable, If you think our efforts and content are valuable,
[02:23] if you encourage our efforts by liking the video, So, we think that the content will be beneficial to them. If you think our efforts are valuable,
[02:37] definitely like the video and share it with them. whatever it is, we will buy options only when there is a break out or a breakdown.
[02:49] There is a logic behind why we are entering. there will be clarity weather to take call side or put side. If it is going down side, we will be on put side.
[03:02] After getting clarity like this, Or, market is falling, I should buy put. you should have an idea on three things to get clarity related to which call to buy.
[03:17] like there is in the money, out of the money, out of the money Even if you don't have this idea, I will explain briefly.
[03:29] If you want to know more about this, First, we should understand this. What is strike price or moneyness or in the money, at the money or out of the money?
[03:42] After understanding these two concepts, we should select the options for the move in the market. Means, if we want to increase the probability of winning based on the move in the market,
[03:56] Means, the edge of the options for the move in the market. Let's try to talk about these clearly. Friends, look at the data on the screen.
[04:13] You all know about at the money, right? If it is at 18000 or 17970 or 18020, 18022. If it is close to 18000, plus or minus 25 range,
[04:28] Nifty has contracts in 50-50 strike price difference. Like 18050,18100, 18150, 18200, 18250.
[04:40] But, it will be difficult for me to tell you 50-50 while going with all these. There will be a difference in nifty-50-50. if you are trading at a spot close to 18000,
[04:55] then 18000 call option or 18000 put option will be a at the money option for you. If it is M, you can think it is market also. Once you understand that it is at the money,
[05:09] If the prices of options are higher than 100 then they are in the money options. If the prices of options are lower than 100 then they are out of the money options.
[05:21] Let's say it is 10,000 rupees and you are buying at 18000 call. If they ask more than 10000 for the options, then they are in the money options. In the money and out of the money
[05:34] in call options if strike price is higher than the sport price, like 18100, 200, 300 and so on are greater than 18000.
[05:46] if strike price is bigger than the spot price, then it is out of the money if strike price is equal to spot price, 18000 put option is at the money.
[06:00] if the amount is higher than 10000 then it is ITM and if it is less than 10000 then it is OTM. Strike price is higher than spot price
[06:17] If strike price is lower than spot price Strike price is Rs.17,800 which you are buying If strike price is lower than spot price
[06:32] Beginners, if you don't want to get confused If you take the strike price that's trading at spot price if you're buying a call option or put option at 18,000
[06:46] You add strike prices wherever they are asking less money Now, let's talk about intrinsic value and time value
[07:03] If you don't understand the word intrinsic value in option buying Most of the time, you're doing it wrong
[07:15] If you don't know the value of the call option or put option There's no logic in why you're buying the same option Because option buying at the end of the expiry
[07:30] Only in the money, there's left In the money, if you want to get call option or put option You should know intrinsic value and time value
[07:43] So, we should keep our enemy low and keep our friend with us That's strength for us I've brought the option chain for this
[07:58] Where is the present NIFTY trading? So, I came to 17,850 call All these are more than 160 points
[08:13] 160, 189, 219, 253, 293 They're asking more money than we're asking They're asking less money than we're asking
[08:26] 17,856 We're asking more money than we're asking 17,850 put is close to 136
[08:41] We understood this Market is close to 17,856 6 more points are down
[08:54] 23rd February contract Here, 23rd Feb is expiry 17,850 becomes 0
[09:10] You know this, right? Our strike price, our call output strike price Their value is 0, if you don't know, remember this
[09:23] End of the expiry is 0 17,850 call Multiply that by 50
[09:35] Why are they buying 17,850 call for Rs 8000? It expires on 23rd Feb From now, the market is increasing
[09:50] And intrinsic value is coming Means, my call option is increasing more than here 18,200, 18,300, their view is also the same
[10:04] When it increases, my call option also increases Because, even if intrinsic value is 0 for them Because there's time value
[10:17] 11th Feb, 23rd Feb They're using time to increase the value That's also time value
[10:30] What's intrinsic value? If you buy 17,700 call today 17,700
[10:45] There's a difference of 150 points Means, 17,700 having intrinsic value of 150 If in case, market expiry time is close to 17,850
[11:00] They'll settle you for 150 points If you buy it, another person should have sold it You'll get settled until all the points expire
[11:17] If you buy 17,800 and close the market at 17,850 If you buy 17,500 and close the market at 17,850 If you buy 17,700 and close the market at 17,850
[11:32] You're losing nearly 100 points If you close the market at the current time You'll get nearly 150 points
[11:48] If it comes back, it's a loss But if you buy it at the money If you buy it out of the money
[12:02] If you buy it at the money, it's a complete loss There's intrinsic value and time value The premium you get out of the money is all time value
[12:16] Time value will depend on some factors The premium you get out of the money is all time value
[12:29] Means, if the market is moving in the opposite direction At the end of the expiry, it will become zero Because time value will be decaying day to day
[12:42] Or if it doesn't move in the direction they want Option sellers see the time value So option buyers should be focused on this
[12:57] So, if the market is at 17,850 It will be 17,850 out of the money It will be based on time value
[13:09] That's what option buyers should remember If we had bought 17,700 If the market closes at 17,850
[13:23] We thought we would lose at 100 points That is, if we trade at the money So, compared with in the money
[13:36] If we compare with the money on our market And we say the market closes there Then if we lose at least 100 points at the out of money
[13:49] 36 points, 29 points, 20, 14 or 11 The money we
[14:02] If we compare with Indamoney, we are losing 100 points in Indamoney. if we compare with Indamoney, we are losing less in Out of the money. Friends, compare with Indamoney and Out of the money.
[14:17] Means, if we close the market at 0, we are losing 100 points. But, if the market rises 200 points from here, means, if the market rises from 17850 to 18050,
[14:31] then, where is the option of 17850? 200 points intrinsic. But, if we think that we are getting 18314 points,
[14:47] if the market closes at 18050 or 18200 or 300, Why do we take risk in Out of the money? our strike price will be Indamoney.
[14:59] Means, we take a risk in the direction of our profit. then, you can keep minimum 160 and buy out of the money.
[15:11] So, people who are clear and confident, Time value will be less. Or, the market will move quickly.
[15:26] the rate of increase will also be more in Indamoney. Let's talk about that. I think you have understood a logic.
[15:42] Why is Indamoney compared with out of the money better? You can apply it to the put. the length will increase by 40-50%.
[15:57] You can apply the same to the put. There is a market at Rs.18,000. Is there intrinsic value in out of the money?
[16:10] So, intrinsic value is 0. how much intrinsic value will be there if the market is at Rs.18,000? it will be 200 intrinsic.
[16:24] If the market stays there, You will lose the remaining points with time decay. Whether you are staying there or above 200.
[16:37] you will get 300 intrinsic value at Rs.18,000. If you are buying at 18,000 put option or 18,000 market, If you are buying at 18,100,
[16:50] If you are buying at 18,300 put option, Whatever you see above intrinsic value, It will definitely decay.
[17:02] If you are buying at 18,000 or 18,000, Whether the view is in the same range as the market, If it moves against,
[17:15] it will become 0 at 18,000 or 18,000. If you are buying at 18,000 or 18,300, Should you buy Indamani,
[17:29] Friends, if you are buying at 18,000 or 18,300, Let us take three people. The person who bought Indamani,
[17:44] gave 60 premium. how much would it cost to buy 230 premium? Let us say he bought multiple of these with the same amount.
[18:00] Even for Out of the money, If he is buying one lot here, Let us assume he bought multiple lots.
[18:12] Here, he holds more lots. Let us assume that Edamani is more. the market closed at 18,000. Okay,
[18:26] It closed at 18,000. The strike price he took was 17,800. The intrinsic value of 200 in 230 is 30 time value.
[18:39] NSE will credit 200 points to his account. Edamani's 18,000 call option. Out of the money,
[18:54] So, he bought 18,300 call option. He loses 20 points. He would have bought multiple lots.
[19:10] There is no difference here. or how much deep value you are buying from out of the money, how much money you will lose here in out of the money,
[19:26] the same way it will be zero in out of the money. If the market closes upside, this is not Edamani, right?
[19:39] When it was at 18,000, if it went to 18,100, then 17,800 strike price is already in Indamani.
[19:51] Because, when it was at 18,100, So, if the market closes at 18,100, He bought 17,800 and the market is at 18,100.
[20:08] How much difference is there between 17,800 and 18,100? So, 300 points is intrinsic minus 230 points at the starting. Similarly, 18,000 call option expires at 18,100.
[20:22] 60 points is added, But, still 18,300 call option is out of the money. For this difference,
[20:35] But, instead, we can buy out of money. Edamani will be out of money. we buy out of money call option.
[20:49] we should understand this difference. Edamani option will move in any way. But, I am telling you this example to explain it in a common way.
[21:03] option buyers buy out of money option with more money than out of money. Even if it closes at 18,200 or 18,300, Since, Edamani is out of money,
[21:18] So, when it comes to 18,300, What if it is close to out of money? So, if you have strong confidence that the market is moving in the direction you think,
[21:32] from Edamani than to buy out of money strike prices. and you don't have enough money to buy out of money, even if the market moves a little bit faster,
[21:47] If it moves more in the old style, But, it is difficult to capture such a big old style move. the percentage of Edamani options will increase.
[22:00] those who want to see a return of more money will buy out of money. you might have got more points in Edamani. If the market moves in the direction you think,
[22:15] and the capital invested in Edamani will increase. if the market moves in that direction suddenly, But, the risk in OTM is,
[22:28] so, when the market moves, OTM prices will also move suddenly. the time value will be less here, Later, the time value of Edamani will be more.
[22:42] or the IV crush due to volatile, out of money premiums, they will decay in a big way.
[22:54] no option buyer will seriously buy an option. Usually, the number of people who show profits by buying options will be very less. I earned Rs.1500 for Rs.4000,
[23:08] in the same money, it will be zero again in the next 4 days. but, I did the option buying, so, the profits are rare in P&L 1 or 2 or 3 years.
[23:22] not even for Edamani, consistently and profitably, The reason why I am saying this strongly is,
[23:34] Means, the money is less. if you go for Rs.10 or Rs.15, If you go for Rs.10 or Rs.15,
[23:46] it is very easy to get it. I am saying this, but, if they don't buy options from far,
[23:58] The beginners, or the people who don't understand this video, With small capital, talking about hero or zero,
[24:11] For people like us, You are giving money to them. they manage and stay profitable.
[24:25] zero or expiry times, you can do it. Nifty is at Rs.18,000, You can buy that,
[24:38] If you have a view, If you have a view, Will you do with 10,000?
[24:50] How much profit will you get for all the lots? what will we do next day if capital is gone? if it is wrong,
[25:02] I can take 1-2% of my capital. I have to buy out of the money That too, with a clear view.
[25:15] the option in Rs.5 or Rs.10, Capital will not increase. everything will be done,
[25:29] If you really do that, he will remove it. no one will hold.
[25:41] Those who are euphoric should keep it. So, I want to tell you all this. with the reason that money is getting less.
[25:53] Remember this. go to Indamani with 1 or 2 strike prices. if you think the break out is strong,
[26:05] The advantage of going to Indamani is, Even if it moves slowly, In day to day opening,
[26:18] But when to take Indamani? Because we are investing more money. If you do not have strong view,
[26:30] If you do not have strong view, do not buy out of the option. you will have a good move in that direction.
[26:44] Your stock has become correct in recent times. You will get a certain percentage of move. If you have strong view,
[26:57] you are thinking of moving quickly. Then, go to Edamani. We should see strike prices to select.
[27:11] move to strike prices 1 or 2. You are thinking of quick move. You are thinking of the results or market breakout.
[27:26] You are thinking of resistance. You are weak. In majority of cases,
[27:38] To play the move from 1 o'clock. There will be less premium. So, those who do quick move,
[27:52] you should play out of the money. Market will go from 18000 to 18300. unless you can do the move quickly,
[28:07] 18300 calls will increase. but you do not have clarity, which is minimum.
[28:21] If it goes up to 18300, You do not have intrinsic value. if it goes to the target,
[28:33] which is minimum. if you are choosing the option, If it goes to the target,
[28:46] which is minimum. I bought it for 18300. If the market goes from 18000 to 18200,
[28:59] It will definitely increase. your call can be double or triple. If it goes below 18300,
[29:12] it will definitely decrease in the coming days. If it goes to 18300, There is time value.
[29:24] If the intrinsic value does not increase, So, always give a strong view. if you want to take risk,
[29:38] or if you want to play X-Pyri second half, if you want to take monthly contract, maximum 1 or 2 strike prices should go away.
[29:55] either you should be proud of the option sellers, or you should be strategy wise, or you should be a strategy wise seller.
[30:12] There are 5 options in many places. They want to go out of the money. If you are going to do the same in the coming days,
[30:26] Keep these logic in mind. Or you should avoid all these and follow the strategies. if you are buying options,
[30:41] You thought it will go from 18,000 to 18,300. If you keep it and sit here, again 18,050, again 17,950.
[30:56] Market has broken out now. If there is no move in Nifty, So, it is 30% or 20% premium I am buying.
[31:10] If you keep stop loss with respect to premium, you can do option buying consistently. I have 30 days time, 20 days time.
[31:24] I will remove it when it grows tomorrow. If you try to keep it as a property with this theme, your hope for the expiry day, half, and morning will not be there in the afternoon.
[31:38] No, I should reduce my decay and time value while buying in the money. we put 200 entrance and 30 points, right?
[31:50] I want to reduce it to 60 points. you can sell it. I showed in the previous video.
[32:05] Even if you go back a little, buy it in the money, sell an option to the target you think is.
[32:20] If you sell the option with the same time value, If you think that it will not be profitable if you increase from there, Anyway, if you are buying an option,
[32:34] Unless you think that the market will move or I have to capture the whole view, Even if you are moving like that,
[32:47] you can sell it, right? you need a dedicated video to minimize the decay. You can sell an option to the out of the money.
[32:59] You can sell a perfect option with basic calculations. But, it will be the same theme we talked about earlier. If you want that,
[33:11] we should sell it, You wanted to make a lengthy video. I will try to explain everything in another video.
[33:26] Friends, our equity series is almost over. There are videos related to commodities, I will try to give you complete information
[33:39] according to the demand you are getting. with respect to price action, strategies related to buying options,
[33:53] Just do demo trading or paper trading Do paper trading until you get the psychological strength. and then move to real trading.
[34:06] in this video. If you found it interesting, And friends, if you want to support our daily Telugu channel,
[34:19] are in the description and comment section. If you are interested in opening accounts instead of going directly to the websites,
[34:32] It will also support our channel. Did you like it? If you think this video will be useful for you,
[34:44] If you have any questions, then subscribe to our channel Jai Hind! I will meet you again with another interesting video. Till then, take care.