ABNUVO- grappling to hit the high

abnuvoAditya birla nuvo, the flagship company of Aditya birla group, a parent for multi business for the group has recently and silently depicted and intersting struggle to break out from the last highs of the counter on the daily charts the counter is struggling the break above the highs of 1273 on a consistent closing basis

 

Although a break above 1281/1297 levels can take this to the next levels of 1330/1357 levels on the daily charts

Higher top slight higher bottom on GOLD MCX

gold top bottomGold recently has formed a consolidation and higher top higher bottom formation on the daily charts in MCX exchange the counter post a steep correction lately, GOLD has also broken above the 14DMA on the daily charts and looks like a bear cartel has halted for a while

 

 

Options Decoded

optionsAn option is a contract that conveys the right, but not the obligation, to buy or sell a particular item at a certain price for a limited time. Only the seller of the option is obligated to perform. Here today we would be discussing Call Option along with a few basic option concepts.

 More about Option types?

Options could be primarily classified into two types; American and European options depending upon when the options can be exercised.

A European option may be exercised only at the expiry date of the option, i.e. at a single pre-defined point in time. All index options traded on the NSE are of European type.

Whereas an American option on the other hand may be exercised at any time before the expiry date. All stock options traded on the NSE are of American type.

 

 When is an option ITM, ATM or OTM?

While trading the option could be ITM (in the money), ATM (at the money) or OTM (out of the money).

In the money option: The situation in which Option’s strike price is below the current market price of underlying in case of call option and above the current market price of the underlying in case of a put option. (E.g. a Nifty 5000 Call becomes in the money once Nifty starts trading above 5000 levels similarly a Nifty 5000 Put would become in the money once Nifty starts trading below 5000)

At the Money: It is the situation in which the strike price of an option is equal to (or nearly equal to) the market price of the underlying security. (For both call as well as put options). (E.g the same Nifty 5000 Call or Put becomes at the money once Nifty starts trading at around 5000 levels)

Out of the Money: The situation in which Option’s strike price is above the current market price of underlying in case of call option and below the current market price of the underlying in case of a put option. (E.g Nifty 5000 Call becomes out of the money once Nifty starts trading below 5000 levels also a Nifty 5000 Put becomes out of the money as the Nifty starts trading above 5000 levels)

 

 Call option:

A Call Option (or simply a ‘call’) is an option contract that gives the holder (or buyer) the right to buy a certain quantity (usually of a specified lot size) of an underlying security from the Seller (or writer) of the option, at a specified price (the strike price) up to a specified date (the expiration date). In simple words it means that the losses for an option buyer are limited (to the extent of the premium paid) however the profits are unlimited.

 

Consider a Nifty 5000 call option bought for Rs.153.Here the Option buyer’s loss is limited to the extent of Rs.153. but his profit is potentially unlimited and would start once the Nifty starts trading above the strike price plus premium paid in this case Rs 5153 (5000+153).

However for the option Writer (or option seller) the pay off is exactly the opposite. His Profits are limited to the option premium; however his losses are potentially unlimited. E.g. for a Nifty 5000 call sold the profit is limited to Rs 153 but the loss is unlimited and it starts once Nifty starts trading above the strike price plus premium received in this case Rs 5153.

Put option:

A Put Option (or simply a ‘put’) is an option contract that gives the holder (or buyer) the right to sell a certain quantity (usually of a specified lot size) of an underlying security to the Seller (or writer) of the option, at a specified price (the strike price) up to a specified date (the expiration date). In simple words it means that the losses for an option buyer are limited (to the extent of the premium paid) however the profits are unlimited.

Let’s consider a Nifty 5000 Put option bought for Rs.150. Here the Option buyer’s loss is limited to the extent of Rs.150. But his profit is potentially unlimited and would start once the Nifty starts trading below the strike price minus premium paid in this case Rs. 4850 (5000-150).

However for the option Writer (or option seller) the payoff is exactly the opposite. His Profits are limited to the option premium; however his losses are potentially unlimited. E.g. for a Nifty 5000 put sold the profit would be limited to Rs 150 but the loss is unlimited and it starts once Nifty starts trading below the strike price less premium received in this case Rs.4850.

USDINR Double Top Formation

USDinr

USDINR on the daily charts has formed a double top formation with a head and shoulder break down below 70 mark on the 14 D RSI in the daily charts, the counter seems to be making a case of profit booking by the bulls who stretched the counter in the overbought territory in the past week or so

 

Free Webinar in Stock Markets

fb invitationEpic Learning Centre are conducting a FREE Webinar on ‘ Trading Strategies in Markets’ on 7th September’ 13, Saturday, 1pm- 2pm.

Topics to be covered

  • Basics of Markets
  • Identifying the trends
  • Use of Stop loss
  • Trailing Stop loss
  • Capital Diversification
  • Basics of Technical Analysis
  • Queries

 

To Register simply click here

 

Who can attend:

  1. Traders/Investors
  2. Stock Brokers/ Sub Brokers
  3. Students
  4. CA/CA/Doctors etc
  5. Housewife………or anybody wishing to learn the art of trading

 

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