You might have heard the experts say “Trade with a stop loss”, “Define your target profits” etc. When you trade stocks, it is quite difficult to set the profit targets & the stop loss simultaneously. Options trading solves that! If your research says go bullish, then we can deploy a strategy called Bullish Debit Spread….
Before we discuss the options strategies, I felt we must learn the importance of a good research. Research here means the homework required to know if we need to buy or sell a stock. The reasons to buy or sell a stock could be technical, fundamental, supply/demand etc. You need not be an expert analyst…
CALLS and PUTS are like the left and right wings of a stock – Since HDFCBK is at 1450, it has a CALL option valued at Rs15.95 and PUT option valued at Rs14.7 When the price of the HDFCBK stock goes up, the value of the CALLS will appreciate and the PUTS will depreciate. Similarly,…
Yesterday we discussed the flexibility of making money on all 3 directional moves:- UP DOWN FLAT The 2nd reason why people trade options is because of Leverage. i.e. you can handle more share quantity with less money. For example: HDFC Bank is trading at: Rs1450, to buy 550 shares you need to spend 550×1450 =…
There are 2 specific advantages option trading has over stock trading. The ability to make money in 3 ways When stock goes up When stock goes down When stock stays flat When you trade/invest in stocks you can only make money if the stock prices go up. There is no way you can make money…
Today we will have a brief intro about my mobile app On the left navigation, you can find options for “All mutual Funds”, “Top Mutual Funds”, “NPS”, “FDs”, “Insurance” etc. When you click each of the links, the detailed plans available will display. Mutual Funds 2. Insurance 3. Fixed Deposits 4. NPS Finally, some important…
There are 4 factors of production namely Land Labor Capital Entrepreneur Land gives you rental income. Labor is the human resource that you employ. Capital is the fund adequacy you maintain. Entrepreneur is the business acumen you have in coordinating the other 3 factors. You need all four factors working together to create “True Wealth”,…
Inflation is the gradual erosion of the “Value of the money” often felt by the rise of prices on things we consume. What this means is Rs1000 will buy fewer things next year. Let us assume a farmer lends 10 hens to another farmer for a year. Each hen costs Rs1000. The condition is that…
Before we talk about Savings, we need to understand “Consumption”. In General economics Income = Consumption + Savings. So what is left after consumption is called savings. Consumption is what you require to live — food, clothing, shelter, transportation, communication etc. For a poor person, consumption will be the major portion of his income. Most likely, his…
When you pay money to a mutual fund AMC, they have to invest in equity or debt according to the goals set. Let us discuss the small and midcap equity funds in specific as the stress tests were ordered for them. SEBI felt the inflow into small caps and midcaps looked like a froth (a…
