Options
Why can't I use the options premium received from selling the options contract?
If you've sold an options contract and noticed that the premium received isn’t available for trading, it’s due to updated regulations from the exchange. These rules ensure better risk management by temporarily restricting access to premiums from ...
How to determine the margin for hedge positions?
When trading hedge positions, understanding margin requirements is key to managing capital and avoiding order rejections. A hedge strategy typically involves taking offsetting positions—such as buying one option and selling another—to reduce overall ...
Why is my market order in the options segment rejected?
If your market order in the options segment is getting rejected at FYERS, it's likely due to our policy to safeguard traders from poor execution in illiquid markets. Here's a breakdown of when market orders are allowed and when they aren't. When are ...
What will happen to my Intraday position if the stock hits the circuit limit?
Intraday trading allows you to leverage positions and buy or sell stocks up to five times your account balance. However, these positions must be squared off within the same trading day. If they aren’t, they’ll be squared off by FYERS at 3:15 PM. ...
Is the buyer of an option subjected to Physical Settlement?
Yes, according to SEBI guidelines, all In The Money (ITM) stock options contracts are physically settled, regardless of whether you are the buyer or the seller. This means if you hold an ITM options position at expiry, you must either provide or ...
What will happen if I don't square off my Options contract on the expiry day?
If you don’t square off your options positions on the expiry day, the position will settle automatically based on the exchange's determined price. The difference between the settlement price and your entry price will be reflected in your trading ...
What is Open Interest and are there any limits set by FYERS?
Open Interest (OI) refers to the total number of active derivatives contracts (both options and futures) that are open at any given time. It acts as a key indicator of liquidity and can help identify trends and potential price shifts in the market. ...
Can I place market orders for commodity options on FYERS?
At FYERS, placing market orders in the MCX Options segment is not allowed due to the low liquidity in commodity derivatives, particularly options, in India. Many of these contracts are illiquid, and allowing market orders could lead to erratic trades ...
How to efficiently square-off order-level hedge positions?
When managing hedged positions (such as Bull Put Spreads) in the options market, it's important to square off positions efficiently to avoid margin shortfalls and order rejections. Here’s a step-by-step process: Key Steps to Square Off Hedge ...
What are Options, Premium, and the Strike Price?
An option is a financial contract that gives the buyer the right (but not the obligation) to either buy (in the case of a call option) or sell (in the case of a put option) an underlying asset at a predetermined price within a specified time period. ...
How is options trading different from trading futures?
While both options and futures are derivative instruments used for hedging and speculation, they have distinct characteristics that differentiate them in terms of obligations, profit/loss potential, and pricing. Key Differences Between Options and ...
What is a call option?
A Call Option is a derivative contract that gives the buyer the right (but not the obligation) to purchase an underlying asset at a predetermined price (strike price) by a certain expiration date. Effects of Buying a Call Option Right to Buy: When ...
What is a put option?
A Put Option is a type of derivative contract that grants the buyer the right, but not the obligation, to sell a specified amount of an underlying asset at a set price (strike price) within a specified timeframe. Effects of Buying a Put Option Market ...
When does the buyer & seller of a call option benefit in the stock market?
In options trading, a call option gives the buyer the right (but not the obligation) to buy the underlying asset at a specified strike price before the option expires. The dynamics of who benefits—buyer or seller—are based on the price movement of ...
How is the margin for buying and selling options determined in the stock market?
In the stock market, the margin requirement for buying and selling options varies based on whether you are the buyer or the seller, due to the different levels of risk involved. Margin for Buying Options (Calls or Puts) When buying an option (either ...
Can an option buyer exercise their right any time during the contract's duration?
No, in the Indian derivatives market, option contracts follow the European style of exercise, meaning they can only be exercised on the expiry date, not before. This rule applies to both index and stock options traded on NSE. What Does This Mean for ...
What is the moneyness of an option?
Moneyness is a key concept in options trading that indicates whether exercising an option would lead to a profit if done immediately. It describes the relationship between the option’s strike price and the current market price of the underlying ...
How can I exercise my options at expiry, and how is P&L calculated?
In the Indian derivatives market, all in-the-money (ITM) options are automatically exercised by the exchange upon expiry. You don’t need to manually place a request unless the contract is not auto-exercisable (which is rare). How Are Options ...
What is the Intrinsic Value?
In options trading, the intrinsic value refers to the real, tangible value of an option if it were exercised at the current market price. It represents the amount by which an option is in-the-money. How Is Intrinsic Value Calculated? Call Option: ...
Can only a portion of the options contract be exercised?
No, options contracts listed on Indian exchanges are standardized, and partial exercise is not allowed. If you're holding an options contract that goes in-the-money, the entire contract is exercised—not just a part of it. Why Can’t Options Be ...
What does assignment mean in options?
In options trading, "assignment" refers to the process where an option seller is required to fulfill the obligation specified in the options contract. This typically happens when the buyer of the option decides to exercise their right before or at ...
Does the seller of the option have control over assignment?
No, the seller (also called the option writer) does not have any control over the assignment process. Assignments are entirely managed and decided by the exchange through a random process, once the option buyer exercises the contract. How Does ...
What is an options spread and what are the types of spreads?
Options spreads are popular strategies among traders looking to manage risk and optimize profit potential using multiple option positions. A spread typically involves buying and selling options of the same underlying asset with differences in strike ...
Does MTM settlement apply to options trading?
No, the Mark to Market (MTM) settlement process does not apply to options contracts. MTM settlement is a mechanism used for futures contracts, where the daily gains and losses are calculated and settled based on the market price of the underlying ...
What are bull and bear spreads in options?
Bull and bear spreads are directional option strategies that involve buying and selling options at different strike prices but with the same expiry. These spreads help traders limit risk and define reward based on their market view. What Is a Bull ...
What's the difference between options debit and credit spreads?
Options spreads are versatile strategies used to manage risk and cost. Among them, debit and credit spreads are commonly used to define maximum loss or gain upfront. The main difference lies in the net cash flow at the time the position is initiated. ...
What is FYERS RMS policy for trading?
At FYERS, we are committed to providing a safe and efficient trading environment for our users. As part of this commitment, we have a comprehensive Risk Management System (RMS) policy to safeguard your trading interests. RMS Policy on Options Buying ...
Is trading in Far OTM options possible on FYERS?
Yes, FYERS provides the ability to trade Far Out-of-The-Money (OTM) options with a broad strike price range. You can buy and sell options contracts that are far from the current market price, depending on the type of asset (Index or Stock). Options ...