Introduction: Unlock the Potential of Options Trading
Options trading has become increasingly popular in India in recent years, offering traders a unique opportunity to capitalize on market fluctuations. With careful planning and strategy, options can provide a lucrative avenue for investors seeking to maximize returns. In this comprehensive guide, we dive into the world of options trading, highlighting the best stocks to trade in India in 2017.
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Understanding Options Trading
Options are financial contracts that grant the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price within a predetermined period. Traders can choose to exercise their options rights, letting them capitalize on favorable price movements, or let them expire worthless if the market conditions are not favorable.
Key Considerations for Options Trading
Before delving into options trading, it is crucial to understand the following considerations:
- Underlying Asset: The asset that underlies the option contract, such as a stock, index, or commodity.
- Strike Price: The price at which the option buyer can buy or sell the underlying asset.
- Premium: The cost of purchasing an option contract, which is determined by factors like market volatility, time to expiration, and the strike price.
- Expiration Date: The date on which the option contract expires and becomes worthless if not exercised.
Best Stocks for Options Trading in India 2017
Based on market analysis and expert insights, here are the top stocks recommended for options trading in India in 2017:
| Company | Sector | Symbol |
|---|---|---|
| Reliance Industries | Oil & Gas | RELIANCE |
| Tata Motors | Automotive | TATAMOTORS |
| Infosys | IT | INFY |
| State Bank of India | Banking | SBIN |
| Wipro | IT | WIPRO |
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Tips and Expert Advice
To enhance your success in options trading, consider the following tips:
- Choose Liquid Stocks: Opt for stocks with high trading volumes to ensure easy trade execution and minimize price impact.
- Understand the Greeks: Learn about the Greeks, such as Delta, Theta, and Gamma, which measure an option contract’s sensitivity to changes in various factors.
- Manage Risk: Determine your risk tolerance and allocate a portion of your trading capital accordingly. Spread your trades across multiple stocks to minimize risk.
- Stay Informed: Keep abreast of market news, economic data, and corporate events that can impact stock prices.
- Seek Professional Guidance: If you are new to options trading, consider consulting a financial advisor or broker for personalized guidance.
Frequently Asked Questions
Here are some common questions and answers about options trading in India:
- What is the minimum investment required for options trading? There is no minimum investment requirement, but it is recommended to start with a small amount to manage risk.
- How long do options contracts last? Options contracts typically have an expiration date ranging from one week to several months.
- What is the tax treatment of options trading profits? Profits from options trading are subject to the prevailing capital gains tax rates in India.
Best Stocks For Options Trading 2017 India
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Conclusion
Options trading offers a compelling opportunity for investors to harness market fluctuations. By understanding the key concepts, selecting the right stocks, and leveraging expert tips, you can unlock the potential of options trading in India. Remember, trading involves risk, and it is essential to approach it with sound judgment and a comprehensive understanding of the market dynamics.
Are you interested in exploring the world of options trading in India?
