Stock market trading is an extremely lucrative method of earning money. If done properly, trading with options is definitely one of the best ways to generate income regularly.
However, without a doubt, you require a certain level of technical expertise and knowledge to trade successful with trading in stock options intraday. If you're looking for a beginner's guide for intraday trading online, you're in the right place. This is one of the most commonly utilized methods to generating wealth consistently.
Whether you've heard about Intraday Stock options trading in YouTube videos, among friends, or on someone's recommendation, you're in the right place to learn everything you need to know.
You'd have probably heard that intraday trading is extremely risky, and some might have even equated it to gambling. Is that really the case?
Intraday Options Trading
Trading options intraday is definitely risky. It's a high-risk, high-reward instrument that allows disciplined practitioners to generate profits consistently. No - it's not straight gambling. Market risks are involved, but with an applied strategy, and knowledge generating money consistently can become a piece of cake.
That being said - there are several important basics that you need to understand, and risks that you need to be okay with before beginning intraday trades with options.
Beginner's Guide to Intraday Options Trading
Options are derivatives contracts that allow the holder to purchase/sell the underlying asset at a given time, at a given price.
[Did you know - Derivative contracts are specific types of contracts that derive their values from their underlying assets. There are three primary types of derivatives contracts - options contracts, futures contracts, and swaps contracts.]
The holders are given the right (option), and not the obligation to exercise the contract during/before expiry.
Say, for instance, you purchase a call options contract for a specific commodity. On/before expiry (depending on whether it's an American or European Options), you will have the option/choice to buy that commodity at the pre-agreed upon price.
The Different Types of Options Contracts Available are as follows
Put Options Contracts - Gives the purchaser the option/right to sell the underlying asset at an agreed upon price, at the agreed upon time.
Call Options - Gives the purchaser the option/right to sell the underlying asset at an agreed upon price, at the agreed upon time.
Some Commonly Used Terminology
Expiration date - The date at which the contract ceases to be valid. In the case of American options, options contract can be exercised anytime before the date of expiry. European contracts on the other hand, options contract has to be exercised only on the date of expiration.
Strike Price - The price at which the contract can be exercised at.
Premium - The cost of the options contract (the premium paid to the options writer, for the agreement). Usually consists of two parts.
Intrinsic Value - The value of the options contract that's dependent on the the market price of the underlying asset. The difference between the current market price and the strike price determines the intrinsic value of the options contract.
Time Value: The value of the contract that's depending on the time duration that's left till the options contract expires. The longer the duration before expiry, the higher the time value of the contract (as it gives the market adequate time to swing, providing both sides a similar chance to profit from the contract). This decay in value over time is called "Theta" within the options world (Something you won't have to worry about if you're trading purely intraday).
Last: The price at which the options contract was sold the last time it was traded.
Bid: The price at which the options contract is ready to be bought for by an interested buyer.
Ask: The price at which the seller is willing to sell the options contracts at any given moment.
Change: The movements in price since the close of the last market session, and the open of the current day, usually expressed in terms of percentage.
Open Interest: The number of options that are freely available for trades in the market.
Volatility: A unit of measurement to track how much the underlying asset moves/swings within a day.
Benefits of Intraday Options Trading
Infinite Upside, Limited Downside - Options contracts allow you to capture all positive price movements. The negatives are limited to the amount of premium paid. In other words, the potential for profits is infinite, and the potential for losses is small.
Low Cost of Entry - Intraday options trading allows you to enter and exit positions that you wouldn't have otherwise been able to participate in due to the high cost of entry. Options contracts make the process much quicker, easier, and with significantly less capital than with other types of securities. They enable you to control the same number of shares with much less capital.
Improved Opportunities for Diversification - Since options contracts are way cheaper, when compared to the underlying asset, you can be exposed to multiple assets and asset classes.
Win-Win - Contrary to what most people say, Options trading is not "I win at your loss". Most options contracts are written by people looking to hedge their long term positions, and limit their market risk. They are insuring themselves against the risk of market volatility, and by trading in options you're essentially absorbing their market risk for a premium.
Disadvantages Of Intraday Options Trading
Low Liquidity - Options contracts, while priced way less than the underlying asset, is also slightly less liquid than the underlying asset.
Price Movement Reductions - Even if the stock/underlying asset moves favorably, the extent of such price movement can be undermined by theta decay. However, when day trading with options, the time value shouldn't be an issue as you're literally holding a position for a day, at the very max.
How To Get Started with Intraday Options Trading?
This is one of the popularly asked questions, that we here at 500 Per Crore get from time to time.
Here's everything you need to know to begin your Intraday Options Trading Journey.
Open Trading and Demat Account
The first thing you need to do when you begin your options trading journey is to open your free Demat and trading account online. Different brokers have different fees, and regulations and it is best for you to do your own research and choose what's the best for you.
One of the best Options Trading Platforms - 500 Per Crore offers the best trading and Demat account online for absolutely free. Through our platform, you can trade/invest in equities, mutual funds, futures and options, ETFs and Commodities - all from a single margin.
Here are some of the benefits that you can enjoy, should you choose to open a free trading account online with 500 Per Crore.
Lowest Brokerage Ever - At a never before heard of 0.005% - the single lowest recorded brokerage in the history of stock exchange.
Free Multilingual Support - Language should not be a barrier to your successful trade. Don't miss out on important trading information and support due to language!
Free Real-time Research Calls - Join 500 Per Crore to enjoy free real time research support from experts in the field.
0 Hidden Charges - Opening Demat and Trading account is completely free. Annual Maintenance Cost is waived off for the first year.
Higher Exposure for Options Trading -500 Per Crore offers high levels of exposure for options writing. Used in combination with our real time research calls and expert support - the sky is the limit for profitable trades.
Free Trainings and Webinars - Don't know how to use the different financial instruments differently? Don't worry - 500 Per Crore has got you covered.
Free Intraday Tips delivered to your phone- Access to highly-rated, free intraday tips with an amazing track record, delivered right at your finger tips.
How do I Open a Trading and Demat Account with 500 Per Crore?
Opening a trading and Demat account online is effortless with 500 Per Crore. Fill out your form here, and wait for us to do the rest!
Our representative will reach out to you shortly, and you're well within your journey to begin employing the best intraday options strategies that you've learned through the resources that we'll mention in the next section.
Where do I learn The Best Intraday Options Trading Strategies?
For you to pick out the best intraday options trading strategies online consistently, it is necessary that you develop a trading system based on some of the popular trading strategies. Different trading strategies vary in complexity, and the time taken to learn, and a good training resource can go a long way in helping you make your trades successfully. 500 Per Crore offers training programs to all our clients, along with calls and webinars to help you generate wealth, not to mention the free intraday stock tips that are delivered to you, right on your phone.
The derivatives market is one of the most profitable markets (definitely the largest) in the world. However, before making trades or investments, make sure you read all the related documents, and understand the associated risks.
What are you waiting for? Open a free Demat and Trading account now, and get started with your Options trading journey.
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