Basic info about Option Trading

1. STOCK MARKET
esented by Aditya Ambavane

2. AGENDA
INTRODUCTION
BSE & NSE
SEBI
INVESTING &
TRADING
TYPES OF TRADING
BANK NIFTY
OPTION TRADING
CANDLES
CONCLUSION

3. INTRODUCTION
• The term stock market refers to several
exchanges in which shares of publicly held
companies are bought and sold. Such
financial activities are conducted through
formal exchanges and via over-the-
counter (OTC) marketplaces that operate
under a defined set of regulations.
• Both “stock market” and “stock exchange”
are often used interchangeably. Traders in
the stock market buy or sell shares on one
or more of the stock exchanges that are
part of the overall stock market
20XX 3

4. What is BSE and NSE
• Most of the trading in the Indian stock market
takes place on its two stock exchanges:
the Bombay Stock Exchange (BSE) and
the National Stock Exchange (NSE).
• The BSE has been in existence since 1875. The
NSE, on the other hand, was founded in 1992 and
started trading in 1994.
• However, both exchanges follow the same trading
mechanism, trading hours, and settlement
process.As of November 2021, the BSE had 5,565
listed firms, whereas the rival NSE had 1,920 as of
Mar. 31, 2021.6
• Almost all the significant firms of India are listed
on both the exchanges. The BSE is the older stock
market but the NSE is the largest stock market, in
terms of volume. Both exchanges compete for the
order flow that leads to reduced costs, market
efficiency, and innovation. The presence

5. What is SEBI and Structure
20XX 5
• SEBI is a statutory regulatory body established on the 12th of April, 1992.
It monitors and regulates the Indian capital and securities market while
ensuring to protect the interests of the investors, formulating regulations
and guidelines. The head office of SEBI is at Bandra Kurla Complex,
Mumbai.
Structure of SEBI
• SEBI has a corporate framework comprising of various departments
each managed by a department head. There are about 20 departments
under SEBI. Some of these departments are corporation finance,
economic and policy analysis, debt and hybrid securities, enforcement,
human resources, investment management, commodity derivatives
market regulation, legal affairs, and more. The hierarchical structure of
SEBI consists of the following members:
• The chairman of SEBI is nominated by the Government of India.
• Two officers from the Union Finance Ministry will be a part of this
structure.
• One member will be appointed from the Reserve Bank of India.
• Five other members will be nominated by the Government of India.

6. Investing and Trading
20XX presentation title 6
INVESTING
• There are two types of investment short and long
term.
• in short investment is done for small duration (1-
5 yrs) and in long term investment is done for
large time period (5yrs +)
TRADING
• Trading means day to day investment into shares
or other equities for mostly earning profit, but
there’s also the risk for loss

7. TYPES OF TRADING
Types of trading are as
follows :
• Equity trading
• Commodity trading
• Options & Derivitives
trading
• Future trading
20XX presentation title 7

8. What’s BANK NIFTY
20XX presentation title 8
• Bank Nifty, is an index comprised of the most liquid and large
capitalised Indian banking stocks.
• It provides investors with a benchmark that captures the capital
market performance of Indian bank stocks.
• The index has 12 stocks from the banking sector.
• The top stocks of the index include HDFC Bank Ltd. 31.61%, ICICI
Bank Ltd. 18.20%, Axis Bank Ltd. 13.02%, Kotak Mahindra Bank Ltd.
12.74% and State Bank of India 10.92%.
• Bank Nifty, like others, is computed using free float market
capitalization method.
• It's index variant includes NIFTY Bank Total Returns Index or Bank
NiFty TRI. The index was launched in 2003

9. OPTION TRADING
Options are contracts giving the owner the
right to buy or sell an asset at a fixed price
(called the “strike price”) for a specific period
of time. That period of time could be as short as
a day or as long as a couple of years, depending
on the option. The seller of the option contract
has the obligation to take the opposite side of the
trade if and when the owner exercises the right to
buy or sell the asset.

10. Call Option & Put option
Call Options
• When you buy a call, it gives you the right (but not the obligation)
to buy a specific stock at a specific price per share within a
specific time frame. A good way to remember this is: you have
the right to “call” the stock away from somebody.
• If you sell a call, you have the obligation to sell the stock at a
specific price per share within a specific time frame — that’s only
if the call buyer decides to invoke their right to buy the stock at
that price
Put Options
• When you buy a put, it gives you the right (but not the obligation)
to sell a specific stock at a specific price per share within a
specific time frame. A good way to remember this is: you have
the right to “put” stock to somebody.
• If you sell a put, you have the obligation to buy the stock at a
specific price per share within a specific time frame — that’s only
if the put buyer decides to invoke their right to sell the stock at
that price.
20XX presentation title 10

11. Option Buying & Selling
20XX presentation title 11
Option Buying
• The buyer of a call option is referred to as a holder. The holder purchases a call option with
the hope that the price will rise beyond the strike price and before the expiration date. The
profit earned equals the sale proceeds, minus strike price, premium, and any transactional
fees associated with the sale. If the price does not increase beyond the strike price, the
buyer will not exercise the option. The buyer will suffer a loss equal to the premium of the
call option
Option Selling
• Call option sellers, also known as writers, sell call options with the hope that they become
worthless at the expiry date. They make money by pocketing the premiums (price) paid to
them. Their profit will be reduced, or may even result in a net loss if the option buyer
exercises their option profitably when the underlying security price rises above the option
strike price.

12. TYPES OF CALL AND PUT OPTION
In-The-Money Call Option
• An In-the-money call option is described as a call option
whose strike price is less than the spot price of the
underlying assets.
• In the following example of Nifty, the In-the-money call option
would be any strike price below Rs.8300 (spot price) of the
stock (i.e. Strike price< Spot price).So, NIFTY FEB 8200 CALL
would be the example of In-the-money call. An In-the-money
option always has some Intrinsic value and Time value.
At-The-Money Call Option
• An At-the-money call option is described as a call option
whose strike price is approximately equal to spot price of the
underlying assets (i.e. Strike price=Spot price). Hence, NIFTY
FEB 8300 CALL would be an example of At-the-money call
option, where the spot price is Rs 8300. An At-the-money call
option doesn’t have any Intrinsic value and it consists of only
time value.
Out-The-Money Call Option
• An Out-the-money call option is described as a call option
whose strike price is higher than the spot price of the
underlying assets(i.e. Strike price> Spot price).Thus, an Out-
the-money call option’s entire premium consists of Time
value/Extrinsic value and it doesn’t have any Intrinsic value.
So, NIFTY FEB 8400 CALL would be an example of Out-the-

13. CANDLES
Candlesticks are useful when trading as they show four price points (open, close, high, and
low) throughout the period of time the trader specifies.
20XX presentation title 13

14. Type of Candle
20XX presentation title 14
Main three type are
• BULLISH ,
• NEUTRAL,
• BEARISH

15. 20XX 15
CONCLUSION
• Option Trading is more profitable than
other type of trading. But it also has
raised chance of heavy losses
• It involves big market player and also
includes inside traders
• It’s a form of short term trading, it
requires strong mindset and psycology

16. THANK YOU
Presenter – Aditya Ambavane