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Different Outlook To Intraday Trading With Nifty Options

Every trader need to have knowledge about trading before they start trading, and here is few points for the traders that will definitely change the outlook to intraday trading.
1.Liquidity: The volumes of the At the Money Strike call or Put are individually equal to the NIFTY Futures Volumes. The combined volumes in the At the Money Call and Put are more than the NIFTY Futures.

2.Options are the only Instruments which move more than the NIFTY in terms of percentage moves.

3.Time DecayOptions are prone to Time decay which is commonly known as the Theta effect.

4.Effects of other Greeks: Implied Volatility tends to increase in range Breakouts and subsides when NIFTY gets in a rangebound move. Predicting the rise or decline in Implied Volatility is a challenging task for traders and needless to say successful predictions carry huge rewards.

5.Specialized skills:
Trading Options thus is a very specialized field where lay traders without any knowledge of the interactions of the key greeks can get caught on the wrong side inspite of the right view on the NIFTY. Example many traders come to me with the question I bought the call and NIFTY moved up some 100 points but the Call option which I bought hardly moved up by 30-40 points.

Here the Trader had a right view on the NIFTY but failed to factor in the effect of the Implied Volatility, Theta etc and ended up making less money inspite of a correct view. Alternatively the Trader would have made better returns by selling some Near the Money PUTS. The strategies keep changing with the views and the above is just a theoretical example.
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