What is Nifty Weekly Options
The NSE added the weekly options on the Nifty 50 Index when they saw huge demand in Bank Nifty weekly options, which were launched in 2016.
If the stock size is right and they are traded inside of a countable trading system that is formed for big profits and small losses, they can be very effective trading tools. Weekly options have high Deltas and most of them are capital intensive. They are ideal for traders that are using trading account on a daily or weekly time frame with entries and exits in their preexisting stock trading system.
Weekly options are long side for less risky investment if traded within the capital options as replacement for stock. Traders often counter losses with weeklies when they buy them as betting tickets without a valid technical analysis for their strike price. An option investor can then escalate their mistake to a low probability transaction by buying a big a position in their low probability option. That is why it is highly recommended to join free stock trading courses for beginners and understand the art of stock trading.
Weekly options do provide investor an access to control large amount of stock against less money for a short time frame. They are too risky if the investor buys too many from given money options, because the odds over time fizzle out they become worthless. Remember, you have one week but you must break this into 3-3-1 format i.e. 3 days and 1 day to do technical analysis. This way you can move later to be able to lock more profits depending on the outcome of analysis.
If you expect to sell for higher price, it’s recommended to sell both the call and put at the money, and then hedge by buying more out of the money – with call and puts on each side. Here a butterfly option is repeated. You don’t have the flexibility to go far out in strike value to sell weekly stocks like monthly options due to availability of the shorter time before expiration.
Weekly options is to be traded with the similar position size that you would use while trading the underlying security. If you normally trade 100 shares of ABC company, then only trade 1 ABC company option contract. Trading in multiples say, 10 option contract units when you can’t manage the loss from a larger position size is detrimental to your account. This will cause you unnecessary mental and monetary stress. Trading the securities in a quantifiable manner will make it easy for you to follow your stock trading plan and be successful. The money options offer better odds of profit making opportunities because you are flexible to decide the direction of the move. With out of the money options, you must pick the direction, the amount of the move, and the time period. This is a proper method to put the market odds in your favour by not overcoming the valued Vega or Theta.
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