Part 2 Support and Resistance

Option Trading in India

India has seen a boom in retail options trading.

1. Exchanges

NSE (National Stock Exchange): Leader in index & stock options.

BSE (Bombay Stock Exchange): Smaller but growing.

2. Popular Underlyings

Nifty 50 Options (most liquid).

Bank Nifty Options (very volatile).

Stock Options (Infosys, Reliance, HDFC Bank, etc.).

3. SEBI Regulations

Compulsory margin requirements.

Weekly index expiries (Thursday).

Physical settlement of stock options at expiry.

Put Options (Right to Sell)

A Put Option gives the holder the right to sell at a strike price. Used when expecting prices to fall.

Example: Buying Infosys ₹1,500 Put at ₹50 premium pays off if Infosys drops below ₹1,450.

Option Market Participants

Hedgers: Reduce risk by using options as insurance. (e.g., farmer hedging crop price, or investor protecting stock portfolio).

Speculators: Bet on price movements to earn profits.

Arbitrageurs: Exploit price differences across markets.

Writers (Sellers): Earn premium by selling options but take on higher risks.