A person says that I have five times the profit. If I had spent 5000, then it became 25000. If someone had spent 10,000, then it became 50,000. And maybe some people do not believe that five times ten times and then they say it happened in the intraday. So people do not believe it. But it is that money can be more than ten times, it can be twenty times. But what is the logic, what is the concept, you should know this.
So that you will not say that money does not multiply in the share market. It definitely happens in the intraday. But do you know what is the fun? If a person tells you that today my money has become ten times, then you can believe him because you will understand the concept. But you ask him one thing, does it happen every day?
Because it does not happen every day. What are the conditions of being every day? You have to understand that it will not happen every day. Leave ten times, it will not be double. But it is my job to explain the concept to you. How does this money multiply? People talk about Nifty, Bank Nifty.
Today we are going to give you live demonstration in this blog, how money multiplies. Solet’s understand a concept first. We have a lot of instruments in the share market, but we are going to talk about option trading specifically. So I want to tell you that money multiplies in options trading. It does not happen all day, it happens in a few hours, it happens in a few minutes and I will give you that live demo.
But I am giving you a disclaimer, do not do this, understand the concept. So the concept is when we are talking about options and I am telling you that it can be 2 times, 5 times, 10 times money. How does it happen? Let’s understand the concept.
So you know that there are add the money options in options. You know that there are out of the money options. You know that there are in-the-money options. If you do not have much knowledge about ITM, ATM, OTM, we have written a blog in detail. You can learn that you can definitely get information about options.
Now when we are talking about Timgad the money and out of the money, let’s take an example that you see Nifty at 18100.You may be reading this blog after a year, so Nifty is there at that time, but we have to take an example, then you will understand. So when we talk about call options, Ethen out of the money, what will happen for the call option?
As far as the market has not reached, for example, the market has not reached up to 18200, it has not increased, so it is out of the money and what happened to 18000, it is in the money, from where the market has left and if we talk about put options and I write 18100 here, then it will come out as add the money, but as far as the market has not fallen, it will be here, 18000 and from where the market has fallen, it will be 18200 for example.
So we have given you basic concept, now what happens when we talk about the difference in the strike price, so if I am taking the example of Nifty, then there is a difference of 50, I took 100and Bank Nifty is of 100.Now I will show you the option chain once and then we will definitely go to the concept of the concept.
So to understand this, just understand one point before showing the option chain that out-of-the-money options are cheap, why are they cheap, I will tell you just now and in the money options are expensive, these are expensive and those are cheap,
so if they are cheap, then they are cheap for anything, I will just show you, first we will see the option chain once and then we will talk about the rest.
This blog is very informative, very interesting blog you will learn the concept because itis important to explain it to you. So this is our option chain on NSE, now what do you see on the option chain, where the price is 180000, what are you seeing, this is out of the money, now out of the money is on the call side, so this is 18200 out of the money
and in the same way, in the money it is 18000 and put a side out of the money is 18000, so you will see a simple logic here, now I am writing this blog on Friday, on 30th December 2022,I am making this blog, so you do not know the date, it is important, I said you are watching after a year, maybe you are watching in the latest, so understand the concept.
Now what is the concept here, if I talk about the call side, then all the in the money options will be 130, 160, thesis around 200, 300, 400, 500, whatever it is, this is all in the money and this is out of the money, if you look down, then you will see 2 rupees, 3rupees, similarly, here also the out of the money options will be cheaper, in the money they will be expensive.
Now weekly expiry is on Thursday, so today on Friday, the premium of 18200on the call side is 80rupees 40 pause, but on Thursday it will expire, if for market example it closes within 18200, then it will remain 5 paisa and will be 0. Now before the market closes, I tell you that whatever the premium is, there are two things in it, I am just explaining the concept once, but I will show you the live demo.
So when we talk about the premium of any option, then there are two things in the premium, one is our intrinsic value and the other is our time value.
So I will show you the concept once, if today the markets not at 18200, then whatever is the option of out of the money, this is out of the money for the call side, in the out of the money option, the intrinsic value is 0 and whatever is left is the time value.
So whatever is left here is the time value, so if today you are seeing that one premium, we gave you an example of 18200, so this 18280 rupees, then this is 80 times value, if the market does not reach here, then it will be 0.
Now these options in the out of the money, there are two things in them, there will be two things in the premium, either your intrinsic value and time value. So what is the concept of intrinsic value, the concept of intrinsic value is how many points are inside the market.
For example, I take a very simple example, you may be confused here, now let’s assume that the exact market you see at 18000, and 18200 is out of the money for you, and am saying that this will be 0, this will be 5 paisa, this will be 0.
Now what will happen to the out of the money option, if the market is closed at exactly 18000, then the option here will also be 0, there is no intrinsic value in it, but now the option inside it will be 17950, how much will it be? Very simple, if there are 50 points inside, then it will be of exactly 50 rupees, and all the out of the money will be 250, 300, 350, 400, 500, all will be 0, and all will be inside, there will be intrinsic value.
Now let’s see the concept, I am going to show you, so when the options will expire, what will happen to the out of the money option that day, you tell me, this out of the money option, the day it expires, you will see on Thursday,
so what you will see, you will see that many people are excited, we will trade on the expiry, why will we do it, that day out of the money options cheap, if we talk about the strike price, I am going to show you, then you will get an out of the money option in 3, 4, 5, 10 rupees, now if the market moves, suppose the market increases,
I am going to show you this too, suppose the market increases and the price comes in the money, if 100 points come in the money, then this option, the time value will expire on the expiry, so the thing of 10 rupees will be of 100 rupees, you may not believe it, but I will show you, in half an hour, one hour, one and a half-hours, the thing of 10rupees becomes of 100 rupees in the market.
on the day of expiry, if the move comes, but if there are two things in the move, the first thing is that the move is necessary, the second thing is that it is necessary to come in your direction, if you have bought a call side, then the first thing is that the move is necessary, if the move does not come, the time passes, the market, the money is over, zero, you will not get anything in out of the money,
if the move comes in the market, you bought a call side, the market did, the money is zero, south of the money options are highly risky, that is why I request you, you are understanding the concept, but you do not start trading regularly, out of the money, I will trade because it is cheap, I am just explaining the concept,
now let’s see, okay, so now we take a live demonstration, I will show you a market, let’s open the chart here, I will just show you, so today I said I am going to write a blog on the 3rd,we will talk about tomorrow, yesterday was our monthly expiry, a very good move comes in the market, you see this Isa brilliant move, a lot of money is made in it, if you have traded in the right direction, at the right time, you would have made a very good money,
nowhere if you have traded in the right direction, now if I talk about this example, you can take any example, here thesis a 1 o’clock candle, you say no, no, not 1 o’clock, I will enter around 2.30
for example, so this candle is a green candle, you see I enter here, example, so now we are talking about 29th December, Let’s see what were the premiums of options in the market on the option chain.
First of all, how much was the market at that time. Here the candle opened, you can see above that opening here you will see the opening. You can see the open price around 18,07075. So we come to the poster option stimulator.
You can do this exercise yourself. I don’t care. I just have to tell the concept; you do it yourself. So you can do this exercise yourself. So we are talking about Nifty, we are talking about the expiry of 29th December, we have taken the date of 29th December. After this, we comet 2.30 and take the option chain at 2.30. Now at that time, the price of the spot that we said, you can see here that it is coming from 18,075 to 76.
Now here at that time, what will be the out of the money option? ₹ 18,100 will also be out of the money, 18,150will also be out of the money. So you assume that the price of 18,100 is 13.I will show you here that 18,100 out of the money at that time at 2.30 you were getting 13. You say no, you want a little cheaper. So now you come up one more step.
You see 18,150, thesis almost 3. So 2.9, you know that 2.9 rupees is very cheap. I will go straight here and buy it and I will buy 36 slots here, that is, I will buy₹ 18,100. 50 slots, you know that multiplication is done by 50. So you are into 36, it is₹ 18,100. You have added position. Now let’s see what happened. So this has opened in front of you.
This is your graph, payoff graph that you can earn here. First of all, how much can you earn, it is undefined, how much you can earn. But what is your max loss? How much money you have invested, the money you have invested, it is almost 5220. You have invested 5220, everything will be zero.
You have bought out of the money if you have not moved the marketing your direction. Now let’s see what happened after this. So in the next 5 minutes, we had an entry at 2.30, at 2.35 we are seeing a profit of 3420. Youwill say that a very good profit has come. But wait a minute, in the next 5 minutes, you had invested 5000, you have earned 5000 from the market. It’s amazing. Now let’s move forward, we have move in front of us.
After that, in the next 5 minutes, within15 minutes, you had invested 5000, your profit is 9500. In the next 5 minutes, more than 11000, in the next 5 minutes, directly 27000, 27450, you had invested₹ 5000 and you have taken a profit of 5 times from the market.
Okay, 22000in the next 5 minutes, ₹57000, you had invested 5000, you have taken a profit of ₹57000, that is, you have taken a 10 times profit. We are talking about 3.05, almost35 minutes have passed for your entry.
In the next 5 minutes, 67000, in the next 3.10,67, in 40 minutes, how is the money being multiplied, you can see this, 58000, 73000, at 3.20, 73000 if that was your position, alright and the market closed. So by investing₹ 5000, you got a profit of 68000, this was in Nifty.
Let’s take the same example of Bank Nifty, I will change the example, let’s come to Bank Nifty, let’s open a new one here, let’s come to Bank Nifty and let’s talk about what time on Bank Nifty, let’s take the same, so we take 2.30, let’s take the same example, we took the entry at 2.30, let’s open the option chain, at that time the price of the spot was 42853, once look at the chart, we talk about Bank Nifty,
so yesterday there was a very strong move in Bank Nifty, you can see this big move and we are talking that we took the entry at almost 2.30here on this candle, so if we took the entry here, then what would have happened, this is our 42850, so above 850, whatever will happen, will be out of the money for us for thecal side, 42800, 900, 900will be out of the money,
now assume that this 43000 is out of the money for you at that time, and there is an option of ₹19.40, you bought it, you bought 36 quantities of it, now let’s see what happens, so how much money did you investing it, you invested ₹17000,₹17000, ₹17500 is your investment,
now let’s see what happens, in the next 5 minutes you are getting a profit of ₹8000, in the next 5 minutes, a profit of ₹10,000, a profit of ₹15,000, a profit of ₹24,000, a profit of ₹71,000, a profit of ₹68,000, ₹1,35,000, you invested ₹17,000, a profit of ₹1,35,000, 3.05 minutes, profit of ₹1,64,000, a profit of ₹1,99,000, almost ₹2,00,000, you invested ₹17,000 and earned it, this is a profit, that is your own, ₹2,13,000, 3.20 minutes, ₹2,13,000,
how much did you invest, ₹17,460,₹2,07,000, ₹2,08,000, now think about it, what people will think here, there is so much money in the share market, I will earn ₹2,00,000 by investing₹17,000, I am requesting you that this does not happen every day, this does not happen every day, you have to understand the concept, on the day of expiry, a big move came, someone took entry in the out of the money option, the direction was right, money was made,
now I will show you one more thing, if the direction of the same person was wrong, then what would have happened, see quickly, suppose his direction was that at 2.30 he would have bought outside instead of call, so we were talking about ₹42,850, so ₹42,850, we will talk about anything inside, similarly he bought an option of ₹22, here he bought 36 quantity, add position, after that see if his direction was wrong, then what would have happened, then it does not take time to become zero, straight loss of ₹10,000 in the next 5 minutes,
if you can see loss of ₹10,000 and in the next 5 minutes, loss of ₹14,000, loss of₹16,000, almost game over, loss of ₹17,000, game finished, whole money is zero, south of the money options are highly risky, your complete capital can vanish away, the whole money which you are investing can be zero, and now we are talking about buying only, in selling there can be bigger loss to someone if he is trading in Naked, that is why we have given you strategies, so now here comes a point that is there any chance that we can catch this direction,
this money is being made, this direction, can you catch it, the answer is yes you can catch it, now there are many things here, we have given you our strategy, trend following strategy is given to you, if you are following the trend, then the trend has given you entry here and you have changed the trend by going here,
so trend following is the strategy we have given you, this is point number 1, point number 2, whenever you take entry, thesis a rule, you come to Nifty, we always tell you that you seeps, today PCR is completely negative and see the move of the market today, this was yesterday, if we talk about today, so today the market has gone down, in fact when the closing has happened, the market has broken a lot, we are talking about Nifty bank, you can also see Nifty,
similarly the market was down because PCR was negative, I just showed you Nifty’s PCR, it was negative, Bank Nifty’s PCR was negative and the market was down, it is completely sold, sell, sell written, so here if you ever want to earn a lot of money in the directional move and want to accurate your direction,
you cannot ignore the put call ratio, the option chain that you trade by seeing the put call ratio, on this option chain, what is change in open interest, this PCR is calculated from that and it is on every time frame, so if someone took entry at 2.30 pm, I am giving you this example, I have screenshot of this, I will show you, so see here I took a screenshot because I wanted to show you, so you saw a big move that a big move came in one direction in Bank Nifty,
so if you had this entry at 2.30 pm, the PCR was positive, it was 1.70 and from here you can see PCR is 1.84, 2, above 2,3 and at one point of time when a big move came, so it became600 plus PCR, at that time will not add it. way, if your direction was right in a highly bullish scenario, then you would have made good money and suppose this was today’s example and it was about expiry, then suppose someone had a position means expiry but this was a highly bullish scenario.
So in this here out of the money and the market fell from here to here, then you are understanding that here in nifty, I can see a 100-point candle. In bank nifty, you can see a very big candle, then money can be multiplied. The direction should be right and your timing should be right, but do not do every day. It has been taught to you that if you want to take advantage of the direction and you have capital, then it is better to trade in one strike in the money option. In fact, you have been told different option strategies as well.
I also told you that Brahma works very well in directional market, but now we talk about sideways market, how money can be made. For that, in the coming Blogs, we are going to give you strategies, which I think you need to know.
If PCR is negative, then you avoid the call side and if PCR is bullish, then avoid the put side. If you earn profit, then there will be no loss. I hope you understood this concept today, which we tried to tell that if people say that our money is multiplied, then how it happens in the market.