Part3 Learn Institutional Trading

Options Trading in India
In India, options are primarily traded on the National Stock Exchange (NSE). Some key features:

Lot Size: Options are traded in fixed lot sizes (e.g., Nifty = 50 units).

Settlement: Cash-settled (no delivery of underlying).

Expiry: Weekly (Thursday) and Monthly (last Thursday).

Margins: Sellers must maintain margin with their broker.

Popular contracts include:

Nifty 50 Options

Bank Nifty Options

Fin Nifty Options

Stock Options (e.g., Reliance, HDFC, TCS)

Tools & Platforms
Successful options trading often relies on good tools:

Broker Platforms: Zerodha, Upstox, Angel One, ICICI Direct.

Charting Tools: TradingView, ChartInk, Fyers.

Option Analysis Tools:

Sensibull

Opstra DefineEdge

QuantsApp

NSE Option Chain

These tools help visualize OI (Open Interest), build strategies, and simulate outcomes.

Taxes on Options Trading (India)
Income Head: Classified under business income.

Tax Rate: Taxed as per income slab or presumptive basis.

Audit: Required if turnover exceeds ₹10 crore or loss is claimed.

GST: Not applicable to retail option traders.

Always consult a CA or tax expert for compliance and accurate filing.

Risk Management in Options
Key rules for managing risk:

Position Sizing: Never risk more than 1–2% of capital per trade.

Diversification: Avoid putting all capital in one strategy.

Stop Losses: Predefined exit points reduce emotional trading.

Avoid Illiquid Contracts: Wider bid-ask spreads hurt profitability.

Avoid Overleveraging: Leverage can magnify both gains and losses.