How to learn Options Trading in India- Tips & Resources

Published on Thursday, October 11, 2018 by Chittorgarh.com Team | Modified on Tuesday, February 25, 2020

There are 2 steps to learning Options Trading-

1. Learning the basics of Options Trading
2. Applying your learnings in the real market

What do you need to learn in Options Trading?

But first, let's look at things you need to get yourself acquainted with to trade in Options. You need to learn-

1. What are Options?
2. Benefits & Risks in Options
3. What are Call & Put Options?
4. Types of Options like Stock Options, Index Options, Commodity, and Currency Options
5. The components of an Options contract like strike price, lot size, expiry date, premium etc.
6. Options Pricing and the factors influencing Option premium
7. Option Greeks
8. How to read Options chain?
9. Options Settlement: How are Call & Put Options settled?

10. How to trade in Options?

These are the basics of Options Trading that one must get acquainted with before trading. In addition, a new trader will also benefit from learning-

1. How to make money in Options in various market conditions?
2. How to predict market sentiments and pick the right Option strategy?

How to learn the basic of Options Trading?

There are various ways of learning the basics of Options trading like-

1. Online Resources- There are plentiful online resources like this website and knowledge centre of brokers where you can learn the basics of Options trading. YouTube is also a great resource to learn the basics of Options. There are hundreds of videos from experts and stock broking companies that help you understand the basics of Options trading.
2. Books- If you're someone who prefers reading offline then books are a great way to master the basics of the Options trading. There are many books available on Amazon and Flipkart that are excellent choices as a guide to understand Options trading. It would be good to pick books by Indian authors as there are some dissimilarities in Options trading mechanism between Indian and Foreign markets.
3. Online Courses: If you want to learn in a structured way then online courses on Options trading are also a useful way. If you are already into stockbroking and have an account with the broker then you can check with your broker whether it offers any training in Options trading. Stockbrokers like ShareKhan and couple of others have tied up with e-learning companies to offer online courses in Options trading. There are also paid courses certified by NSE, MCX, NCDEX etc., which you can join to get your fundamentals right in Options trading.

Applying your learnings in the real market

Getting command over the basics of Options Trading is half the job done. The real learning starts with trading.

However, before that, you can try out Option trading simulators to grow your confidence.

Now it's time to trade. Here are few tips while you go on making your first Option trade-

• Necessities for trading in Options- You need a trading account and a savings bank account linked to the trading account. If you already have a trading account then check with your broker if you can trade in Options with that account.
• Trade with a Plan- Follow business websites and newspapers to understand the current market environment. Create a plan on what position will you take and what Option will you buy. Don't make the mistake of trading on impulses and guesswork.
• Understand your broker's trading platform- Most of the brokers' offer 3 versions of their trading platforms- installable, website and mobile app. Start with the website, understand its various features and then move to other versions as you progress.
• Start small- Start with a couple of thousand rupees. Your effort should be to see how Option trading works rather than on making a profit. Start by buying 1 lot of a Call Options contract. Wait for a few days and then sell it. Start with Index Options and then move to Stock Options as the latter is riskier. Once you have understood the Call Options move to Put Options.
• Learn Option Strategies- Once you're confident with single position trades like buying a Call/Put Option, move to learn option strategies that involve simultaneously taking 2, 3 and 4 positions. We have explained 25 Options Strategies here. It's a good place to start sharpening your strategies. It's a good place to start sharpening your strategies.