How to trade in Stock Options | Guidance in Stock Option Trading |

If you are new to Stock Option Trading and want to know “How to Trade in Stock Market”, then you can find your queries related to option in the following content presented by Profitaim Research.

What is an Option?

  • An Option is an agreement between buyer and seller. Gives the RIGHT to the BUYERS and the OBLIGATIONS to the SELLER to buy or sell the stocks, at a later date, at a certain place.
tock Option Trading in Premium service
An option gives the RIGHT to the BUYERS and the OBLIGATIONS to the SELLER to buy or sell the stocks, at a later date, at a certain place
  • 1 Contract = 100 shares
  • Premium: Price per contract of the option (Bid and Ask).
  • Strike: Price that shares can be bought for call options, or sold for put options.

Option Classifications

Call Option : an option which gives a right to buy the underlying asset at a strike price.

Call Option Trading in Stock Option
Call option is an option which gives a right to buy the underlying asset at a strike price.

Put Option : an option which gives a right to sell the underlying asset at strike price.

Put Option trading in Stock Option
Put option is an option which gives a right to sell the underlying asset at strike price
  • Both the Call and Put option buyers are buying the rights, that is they are transferring their risks to the sellers of the option.
  • For this transfer of risk to the sellers, buyers have to compensate by paying Option Premium.
  • Option premium is also known as Price of the option, Cost or Value of the option.

Buying and Selling Options

Think Stock in Bullish Or Think Stock in Bearish

  • Buy Calls or Buy Puts

 

Point to be noted

  • Buy to Open” and “Sell to Close”
  • Possible in a Cash Account-Low Capital Required
  • Pattern Day Trading does not apply to Cash Accounts
  • Option settle the next day not 3 days

The Stock Option Chain

  • Volume: Contracts traded in current day
  • Open Interest: Outstanding contracts not yet exercised
  • Delta: +/- of option price related to $1 move in stock.
  • Gamma: Measures rate of change of Delta
  • Theta: Time decay, drop in price of option per day
  • Vega: Measures change in Volatility

 

Example: 

  • Delta 0.4, stock moves up $1, the option goes up 0.40
  • Gamma 0.1, Delta goes to 0.5 if stock moves up $1
  • Theta 08, Option price losses that per day all else equal
Entries and Exit

Which options to play?

  • Bid/Ask Range
  • Volume/Liquidity
  • In or Out of the Money

Stop Loss

  • Much more tricky than with stocks
  • Wide bid and ask stop out
  • Sell while the stock is moving in your direction at the ask, not chasing the bid down.
Selling Options for Consistent Income
  • “Sell to Open”
  • Paid premium right way
  • Only for companies you WANT to own, even with no intention to do so
  • Stock stays above strike, you keep premium and walk away
  • Stock falls below, you keep premium but must buy 100 shares per contract
  • Margin vs. Cash

Stock Market key to Success | Intrading Trading Tips |

The best place to make money with minimum investment and instant return is the Stock Market and this statement is assured by Profitaim Research Advisory.

1.For stock investing the fundamental analysis is very crucial

Fundamental analysis means evaluation of the long term prospects of a company
Fundamental analysis involves the evaluation of the long term prospects of a company and its competitive advantage.

Fundamental analysis involves the evaluation of the long term prospects of a company and its competitive advantage. Most importantly analyze the financial performance of a company which involves Profit-earning ratio, Profit-to-sales ratio and cash flow generation.

2. Investors have to understand the financial terms and the companies’ annual report

Analysis of companies annual report
Self –analysis of companies’ annual report is very beneficial and crucial before investing in a particular company.

To understand the financial terms might be time- consuming for investors but the self –analysis of companies’ annual report is very beneficial and crucial before investing in a particular company. In the self-analysis of companies’ annual report you have to do the maths with ratios as well as should consider all the factors affecting the company’s performance like profitability, capital adequacy, debt burden and ability to service debts.

3. Stock investing demands Patience from Investors

In Stock market trading, “Patience is a Trader’s Asset”
In Stock market trading, “Patience is a Trader’s Asset”, according to the opinion of Profitaim Research Advisory.

In Stock market trading, “Patience is a Trader’s Asset”. If the traders loose patience then they have to bear losses in trading. As said by Legendary investor Warren Buffett says his favorite holding period is “forever”. Proper patience is needed throughout the lifecycle of the trade, at entry, while holding and exit

4. Keep update yourself with World News

World news Update with Profitaim Research
As an investor you have to update yourself with the world news with Profitaim Research

As an investor you have to update yourself with the world news because all are aware with the fact that the company with news shows upward and downward movement in stock market, which is essential for trading.

5. Sell the stocks at the right time is equally important than buying good stocks

Buying selling decision at right time
All investing is subjective, and there is no universal rule that tells investors when to sell.

Successful investors always know when to sell stocks based on the value of the underlying companies. They sell when the thing that makes a company great no longer applies. A company falling out of favor with a consumer or having a market capitalization that exceeds other companies within its industry can be an indication the company is no longer great. However, all investing is subjective, and there is no universal rule that tells investors when to sell.

 

Fired by Steve Jobs and is Now a CEO

This Guy Was Fired by Steve Jobs and Is Now a CEO—With Some Advice for Entrepreneurs

The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question, “What’s the worst thing you can say to a potential investor?” is written by James Green, CEO of Magnetic.

Journey starts from Firing by Steve Jobs

Nearly 20 years ago during the first tech boom, I was faced with a tough predicament. Steve Jobs had fired me from Pixar, my immigration visa was going to expire, and my money was gone. I was fortunate to know a couple of Australian lads who were starting an ad-serving business, and I wanted in. To become a founding member of the business, I would have to invest what little money I had left, bring on three clients, and raise $1 million in funding. So, I got to work and ended up founding my first company.

Two decades later, I’ve run four startups prior to my current company, which I’m still raising money for. And when I think back on what has been integral in pitching potential investors, it’s remembering that these are people I’m dealing with. As author John Green puts it in Paper Towns, “What a treacherous thing to believe that a person is more than a person.”

Special advice to all Advisors

The worst thing you could say to a potential investor isn’t related to any particular subject, concept, or moral imperative. You can always find an investor who will be okay with extreme positions that I would personally object to, such as, “I don’t believe in profitability,” or, “I’ve got an idea that will keep X people out of the country.” What you should never say to a potential investor is, “Things just got worse.”

In your first meeting with an investor, you should do two things: Most obviously, get them excited about your idea, and then, as you are explaining your idea, make sure that any big “gotchas”—like fudging sales numbers or touting a high-profile team that hasn’t even been hired yet—are out in the open in this first meeting.

Investors evaluation criteria

Here’s how all investors evaluate opportunities: The more I learn or find out, does the opportunity look more-or-less the same? For this reason, I try to be transparent about any setbacks during the first meeting. Then, as the investor digs deeper, they won’t discover anything that hasn’t already been disclosed.

A great example, and probably the most common error first-time entrepreneurs make with new investors, is giving sales numbers that they’re not certain are correct. There is almost nothing worse than negotiating an equity investment and then sheepishly explaining that the numbers you shared at the beginning are worse now. And even if you artificially inflate the numbers and are able to hang on long enough to get the investment and then revise down your forecast as soon as the money is in the bank, you’re going to poison your relationship. It’s a terrible way to start.

And this isn’t just about the beginning of an investor relationship. It’s always best to deliver bad news as quickly as humanly possible so that an investor never discovers these things by themselves, or discovers that the situation has been bad for a while but you never told them.

Relationship with investors

Investor relationships are just like any other kind of relationship. They are built on trust. At the risk of being cliché, in a trusting relationship, you should be free to speak your mind and tell the whole truth all the time, no matter how painful. Holding that back, hiding it, delaying, or in any way prevaricating communicating the tough stuff to investors is what you should never, ever do.

Stock Cash Super HNI services Plan at Profitaim Research

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Planning to sell Household Gold

Selling Household Gold becomes tougher from April 1 | Profitaim Research |

Getting instant money against sale of your household gold may become tougher from April 1.

The government, in its amendment to the finance bill, has reduced the cash limit for sale against gold from Rs 20,000 to Rs 10,000 per person a day, which means that even if one needs money during an emergency, he cannot encash his household gold and get the money on the spot.

Income Tax Eye’s is on you if you are buying gold beyond Rs 10,000

If jewellers, or gold traders, raise multiple invoices for buying gold beyond Rs 10,000 in cash from the seller, they will come under the taxman’s lens under the new scheme of things.
“This will affect rural India the most where people are not yet accustomed to bank transfers or online transactions. In urban India, a buyer can transfer money to a seller’s account and the latter can withdraw it,” said Saurabh Gadgil, national director, India Bullion & Jewellers Association.

Earlier it was Rs 20,000

Earlier, when the limit was Rs 20,000, gold traders would buy gold and raise a number of invoices against the purchase if the value exceeded Rs 20,000. With the government keeping a watch on gold trade, it will become difficult to raise multiple invoices. What can happen is that an entire family can come to a jeweller and sell gold individually and take a portion of the value of gold in cash. Even if that happens, the government can keep tabs on the transactions.“Initially, there could be some problems but people will get used to it. It may take some time,” said a Mumbai-based jeweller.

For more accurate news

Chandrasekaran, popularly known as Chandra, is the first non-Parsi and third non-Tata chairman of the Tata group.

Tata Sons to invest Rs 10,000 crore in group companies

Among the first decisions taken by N. Chandrasekaran as chairman of Tata Sons was to tighten the holding company’s control over the $103-billion conglomerate, recently shaken up by a power struggle between Cyrus Mistry and Ratan Tata.

The Tata Sons board approved a resolution to invest up to Rs 10,000 crore in various Tata group companies at the first board meeting chaired by Chandrasekaran on February 21.

“Resolved that approval of the board of directors be and is hereby granted to the company to invest amounts not exceeding Rs 10,000 crore for subscribing to issues of securities and/or purchasing securities in various companies of which Tata Sons Ltd is the promoter and/or a shareholder,” according to the resolution, a copy of which has been filed with the Ministry of Corporate Affairs.

The filing didn’t give any reasons or mention the companies in which the funds would be invested.

Another big decision related to investment

The board, on the same day, also decided to raise up to Rs 7,000 crore by selling bonds to refinance debt, invest in securities or provide loans to companies.

The fund-raising could be done in one or more tranches. “We do not share information on such matters. Suffice it to say that, from time to time, Tata Sons raises funds as part of its ongoing activities,” Debasis Ray, Tata Sons group spokesperson, told ET in an email.

Chandrasekaran’s rise to the top job at the 149-year-old conglomerate in February followed a battle for control after former chairman Mistry was unexpectedly ousted in October last year. The board said it had lost confidence in his leadership, naming Ratan Tata as interim chairman before Chandrasekaran was picked as a permanent replacement.

Mistry Versus Tata

Mistry has launched a legal battle against the Tatas at the National Company Law Tribunal. The Shapoorji Pallonji group, owned by Mistry’s family, has an 18.4% stake in Tata Sons.

During the fight for control, Mistry refused to step down from the chairmanship of listed Tata companies. Ratan Tata had to rely on Tata Sons’ shareholding and the support of institutional investors to remove him from these boards.

About Tata Sons
Tata Sons, an investment holding company of the Tata Group, holds shares in more than 100 Tata companies, including 29 publicly listed enterprises that have a combined market capitalisation of about $116 billion. It earns money through the payment of dividend, fees and interest by Tata group companies.
“I look forward to working with all the group entities, bringing the group together to make an impact both in terms of business and also in terms of the society, at large,” Chandrasekaran had said on the morning of February 21, just before heading for his first board meeting as chairman.
He sees binding the group together— with its three-tier structure of Tata Trusts at the top, Tata Sons in the middle and then the operating companies —as a key responsibility that comes with the job.
About Chandrasekaran
Chandrasekaran, popularly known as Chandra, is the first non-Parsi and third non-Tata chairman of the Tata group. The group’s debt burden amounted to Rs 2.26 lakh crore ($33.7 billion) on March 31last year. The investment company reported a standalone profit of Rs 3,013 crore in the previous financial year, a 67% fall from Rs 9,062 crore a year earlier. On a consolidated basis, profit rose 21% to Rs 23,119 crore.
Debt stood at Rs 225,740 crore as of March 31, 2016.

Reliance Industries Shares fell 3% after ban

RIL shares slip 3% after Sebi’s F&O ban

Shares of Reliance Industries (RIL) fell 3%

Shares of Reliance Industries 0.02 % (RIL) fell 3% to Rs 1,250.75 on Monday as investor sentiment soured following an order by the Securities and Exchange Board of India on Friday barring the company from accessing the equity derivatives market for a year.

Analysts Viewpoint

Analysts said the impact of the order on the stock will be shortlived as it will not affect its business operations.

The Penalty To Reliance Industries

Also, the penalty amount is low for a company which reported a consolidated net profit of over Rs 7,500 crore for the quarter ended December. The regulator directed the company to disgorge Rs 447.3 crore along with annual interest of 12% from November 29, 2007 onwards till the date of payment.

The regulator alleged that the company indulged in fraudulent trades in its erstwhile listed subsidiary Reliance Petroleum 0.34 % in 2007.
The Sebi order, weak market and some profit booking after the recent rally pulled the stock down, but it will not have a lingering impact. With the Sebi order, it is not the quantum of fine that bothered the market, but the corporate governance factor,” said SP Tulsian, founder, Premium Investments.

Reliance and Jio

Reliance said it will challenge the order in the Securities Appellate Tribunal. Between February 21 -when the company announced that it will start charging customers for Reliance Jio’s telecom services -and Friday, the stock has gained 18%. Reliance has spent about Rs 1.5 lakh crore in capex on Jio.

“The stock should not fall more than 2-3% and that will be bought into as the mood is positive for the stock , “ s a i d Mehraboon Irani, head of private client group business at Nirmal Bang.
Trading Tips regarding RIL shares
3 conditions by Profitaim research that assures higher growth in trading

3 conditions that assures the higher growth in Trading | Profitaim Reviews |

Formula of High Growth Low Valuation

The most successful formula for investing in any stock is High Growth Low Valuation. If a stock is trading below its real value and shows a growth as well, then the expectation of high returns for investors increases. Today, we are telling you about stocks that are the cheapest stock of companies that grow high in the eyes of the broking house.

Read those assured conditions

ICICI Direct has included companies that meet the three conditions in the cheapest stocks with higher growth. This list includes-

  • Companies above the market capital of Rs.1000 crores, whose profits are more than 20% compared to their sales.
  • At the same time, the price to earning ratio is less than 20 and the price to sell ratio is less than 1.5. According to market experts, if a company’s profit is more than 20 percent of its sales, i.e. the company is raising its margins on good sales. At the same time, it is generally assumed that Profit Earning ratio is less than 20, then there is a possibility of increase in stocks.
  • The price-to-sales ratio is below 1.5 per cent, but it is believed that the stock is below the performance of the company.

Companies with good Profits, PE Ratio and price-to-sales ratio

The list given by ICICI Direct comprises 39 stocks, whose Profits, PE Ratio and price-to-sales ratio are meeting the above conditions. In this included Oil India, Reliance Capital, NMDC, Sonata Software, ONGC, HDIL, GMDC, Siemens, Glenmark Pharma, Aban Offshore, Hindustan Zinc, Infosys, Axis Bank, PTC India Financial, Coal India, Power Grid, Alembic Pharma, Rural Electrification. is. Broking House has issued investment advice in some of these companies. These stocks can still invest in today.

Profitaim provides you trading tips regarding current share market

Stock market is hitting new highs: Here are 8 tips to invest wisely

As the stock markets touch new highs, some investors are jittery while others are excited. Here’s how to avoid errors and make the most of the situation.

With the stock market hitting a new all-time high, confusion among investors has also hit a new peak. While some believe that the bull market has finally started and will take the market to much higher levels, others are scared of a crash.

Here are some tips from experts to help you make the most of the situation.

2017 given increasing signs global economy is getting into recovery mode.

Equity markets looking a little expensive but not overpriced

Emerging markets show signs of growth

From a wider perspective, there are increasing signs that the global economy is starting to get into a proper recovery mode. The emerging markets in particular are showing signs of growth, whilst generally easier monetary conditions are allowing for the paydown of debt, something which the steady rise of inflation could help further.

Meanwhile, fourth-quarter company earnings were, on the whole, better than expected on both sides of the pond. The first-quarter 2017 earnings which will be reported over the next few weeks will be scrutinised to see whether companies are holding up their side of the bargain with the strong earnings and profit growth they have been showing of late.

As the picture continues to emerge, this is an interesting time for investors.

Emerging stock markets show signs of growth
Emerging stock markets show signs of growth in Global Economy

Markets are beginning to look a little expensive on historic valuation terms, but not overpriced. By the same token, much of what has been priced in has yet to be delivered, such that sentiment will remain fragile until some tangible benefits begin to wash through. There is also an increasing feeling that markets may have risen too far too fast – virtually in a straight line to new record highs in recent months – such that some sort of correction is inevitable if the news flow disappoints.

By the same token, in this era of historically low interest rates and accommodative monetary policy, there could yet be much to go for and, in any event, with many of the fundamentals intact, any such market correction could actually present a buying opportunity on the dip.

Trump election promises

There is little question that sentiment remains positive that Trump’s agenda will be pro-business, with election promises of infrastructure spending and tax reforms turbocharging the main US indices. As things stand, however, details on either remain sparse and there is an additional complication.

Trump’s promise to repeal and replace the Affordable Care Act – commonly referred to as “Obamacare” – was pulled from the voting schedule in the House of Representatives on Friday (24 March) when it emerged that Trump could not get enough Republican support for the measures.

At a time when the president’s political capital should be at its highest, any failure to deliver on this major reform would inevitably cast aspersions on his ability to follow up with the other reforms the market has been so eagerly anticipating.

This in turn would be negative for sentiment and would no doubt see markets giving up some of their gains.

Donald Trump makes so many promises to collect votes in Election 2017
Donald Trump makes so many promises to collect votes in Election 2017

On the other hand, the bulls would point to some of the market rises being down to a lack of negatives in those election promises. This is a contrarian way of thinking which boils down to the lack of “non-negatives” – that is, one of the reasons why companies have been reluctant to invest in their own businesses over the last few years has been a fear of ever increasing regulation and red tape, as well as the unknown possibility of tax hikes around the corner.

As such, the argument goes that even if the reforms Trump wants to get through are not delivered, the very fact that he is attempting to do so is enough to show that there should not be any further regulation or tax increases to come. This has somewhat reignited the “animal spirits” in the US for both company bosses and investors alike.