EXPIRY Day Option Trading : LIVE DEMO MASTERCLASS | Options Trading for Beginners Strategy

Now you can see that our loss has been recovered and we are in profit. So here you can see This is a normal day chart In which you can see that we get to see a movement of 70-100% And this is a particular day chart In which if we see percentage wise So here we get to see a very big movement in comparison to a normal day Which sometimes happens 4-5 times or more than that And even on this particular day The option of Rs.10 sometimes reaches Rs.100 or Rs.200 Which means your money is 10-20 times m

ore than that So if you know a little bit about futures or options Then you must have heard about expiry day And this is the particular day where we get to see such big movements in options So you must have heard about expiry day But what is this concept in reality? Why on this day an option has a capability to give 3-4 times or more than that Most of the people don't know this And those who trade without this knowledge They get a loss on 90% cases on this day Apart from this, there is another t

rend in the market Zero to Hero Which means either your money will be 0 or 3-4 times How does all this happen? So in today's video, we will understand all the basics about expiry Which you should know before taking a trade on this day Now first of all, let me tell you The biggest difference between a normal day and an expiry day Is the value of an option contract Where on a normal day, you will get an option contract for Rs.300-600 But on an expiry day, you will get it for Rs.50-80 But the main

question is, why does this happen? So for this, let me ask you a question Which you have to answer So the question is, if I tell you that you have to gain 10 kg weight in 6 months Will you be able to do it? So yes, there are possibilities Many of you can do it Now if I reduce this time to 4 months Many people will be able to do it Some people will not be able to do it But in comparison to 6 months It will be difficult to do it in 4 months Now if I tell you that you can increase your weight in 1

month Then the probability here has decreased even more Now if I tell you that you can increase your weight in 1 week Then the probability here has decreased even more Similarly, to achieve a goal The less time you have The less probability you have of achieving that goal So this time value is also included in an option contract If we analyze the price of an option contract Then basically it is made up of two things In which the first is its intrinsic value And the second is the time value If we

talk about intrinsic value Intrinsic value is the difference between the spot price and asset price of any contract I know you have not understood this So let's understand this with an example Suppose we have an option contract of Bank Nifty Whose spot price is Rs. And at the same time, the current value of Bank Nifty is Rs. So in this case, the intrinsic value of that contract will be Rs. So the intrinsic value is calculated in this way And in this intrinsic value, the time value of a contract

is also added So suppose you buy a weekly expiry call option of Bank Nifty of Rs. And the current value of Bank Nifty is Rs. Now you know that the weekly option of Bank Nifty expires on Wednesday And let's assume that you bought it on Thursday of last week So if we talk about Thursday to Wednesday We have 4 trading days left Which means this option has a lot of time to expire If the time is more, then the probability of going from Rs. 46,000 to Rs. 46,500 of Bank Nifty is also more And because

the probability is more, the time value in this case will also be more But as the Wednesday passes, the probability of increasing 500 points will decrease And when the probability decreases, the time value will also decrease And when that option expires, then its time value will be zero Let's assume that I have told you that you have to increase your weight by 10 kgs in 1 second Or in less time than that Then its probability is zero So that's why the time value here will be zero So as we know th

at there are two types of options in the market One is the monthly option Whether it is Nifty or Bank Nifty, it expires on the last Thursday of the month Well, there is an exception to this, Fin Nifty, whose expiry is on the last Tuesday of the month But if we look at it in the short term or from a quick perspective Then we don't see much volume or movement in the monthly options The reason for this is that most traders trade in weekly options And people use monthly options like a hedging tool S

o that if there is a big opposite move, then the monthly option in this case will save them from big losses So we can say here that most traders trade in weekly options By the way, which option do you trade in? Weekly or monthly? Do comment and let us know And if you haven't liked the video yet, then do like the video And if you want to watch videos related to trading, then do subscribe to our channel Because if you don't subscribe, then you may never get to watch our videos again So now if we t

alk about weekly expiry Then Nifty expires on the last Thursday of the month But if we talk about Bank Nifty, then it also expires on the Thursday of every week But after a circular in September 2023, it has been shifted to Wednesday That is, now the weekly expiry of Bank Nifty is on Wednesday Apart from this, if we talk about Fin Nifty, then its weekly expiry is on Tuesday So far we have understood what option expiry is and why it happens So now we understand that at this time, how do these opt

ions have the capability to give so many returns? Finally, what is the calculation that is different in normal trading day and expiry trading day? Because of which we can see 2x, 3x, 4x and even more movements on the day of expiry It is very important to understand this Because if you already know, then you can take the expectations of your returns rationally How much profit can an option give you? What is the risk in it? You can make your mindset by understanding this so that you do not have an

y fear after taking the trade So let's assume that you have bought a 46,000 at the money put option of Bank Nifty Its price is now 500 rupees And now its expiry is far away Now because we are buying an ATM option, its delta will be around 0.50 Those who do not know, I will tell them that delta is an option Greek On the basis of which the price of the option changes But apart from this, there are other option Greeks like Theta, which is very high on the expiry day And because of this, the time va

lue is very fast But now we are ignoring the rest of the option Greeks so that you can understand it easily So now let's assume that the bank nifty is from 46,000 to 45,900 That is, here you can see a movement of 100 points So because the delta is 0.50, then the price of the option in this case will be 100 multiplied by 0.50 That is, 50 rupees will change So in this case, we will get a return of 50 rupees per 500 rupees, which is about 10% Now let's apply this example on the expiry day So let's

assume that the price of the option on the day of expiry is 50 rupees In this case, the delta will be around 0.50 And even in this case, if the same save movement comes That is, the bank nifty is from 46,000 to 45,900 That is, we get to see a movement of 100 points So in this case, the delta is also 0.50, there is a movement of 100 points So the change in the price will be of 50 rupees But note here that in the first case, the option we bought was for 500 rupees And there was a movement of 50 ru

pees on it, so we got a return of 10% But the option we bought here was for 50 rupees And there was a movement of 50 rupees on it, so we got a return of 100% That is, the movement is exactly the same But on normal days, that movement gave us a return of 10% And on the day of expiry, the same movement gave us a return of 100% So because the price of the option on the day of expiry is very low That is why even if there is a little movement in the bank nifty Even then we get to see a very good vola

tility in that option And because there is a lot of volatility on the day of expiry So that's why you can either make a lot of profit on the day of expiry Or it can be very dangerous for you And in such cases, if your view comes out right, then it is a very good thing But if your view comes out a little wrong, then you can see very big losses So let's look at it practically once So today is 20th February, it is Tuesday Now I have told you that the weekly expiry of the bank nifty is on Wednesday

That is, the weekly expiry of the bank nifty will be tomorrow So now if we look at the add the money option of the bank nifty So you are getting it for 287.86 rupees And now the bank nifty is 300 points up That is, the bank nifty has increased by 370 points And here you can see that the add the money option has increased by around 77% And now its price is 290 rupees While I told you that the expiry of the fin nifty is on Tuesday That is, the expiry of fin nifty is today So if we go to fin nifty,

then the add the money option you are getting is of 57 rupees And you can see that this option has already increased by 180% That is, almost whoever invested in it in the morning, his money is almost gone Now you can see that the changes are also coming very fast. Here you can see 178%, 179%, 177%, 176%. Now if you want to see how much delta is there, then for this you have to remove nifty from here and select fin nifty. Now here we are getting fin nifty, you can click on it. Now here, the dema

t account that I am using, you can also see delta in it. To see delta, you have to click on Greeks. And after clicking on Greeks, you can see that delta of 20,700 is 0.76. And delta of 20,500 is running around 1. That means if you have bought 20,500 and the market will increase a little, then the price of the option there will also change that much. Now I will show you an option of fin nifty. Let me clear that I am buying this to make you understand. And I have not done any analysis. So the resu

lt of this can be anything from positive or negative. So I am buying its add the money option. So to buy it, we clicked on buy. And I just want to make you understand, that's why I buy one lot. Which I am getting for Rs. 2124. So I have bought it. So our position has been bought. Now I also put my stop loss here. Which I have bought it for Rs. 51. In the price of Rs. 49, the price has come to Rs. 48. So I put its stop loss of Rs. 35. These are things to make you understand. So we have put a stop

loss of Rs. 35 here. Now after this, we have put a limit order. So you can see that our stop loss of Rs. 35 has been put. Its price has come to Rs. 44. And we are getting a loss of Rs. 254. For Rs. 218 and Rs. 202. This is just an example. You don't have to see it like any recommendation. So now the loss is of Rs. 240. Now you can see that the price has come to Rs. 42. We are getting a loss of Rs. 330. So what is the purpose behind buying this option? The purpose is to make you understand that

you can see how much volatility is there in this option. How fast its price is increasing or decreasing. You saw that I bought it for Rs. 51. And the price has come to Rs. 44. It has come to Rs. 43. And it can easily go to Rs. 35. Means my stop loss can be easily hit. And if the price comes to increase, then it can increase very fast. Now you can see that the price is around Rs. 43. We are getting a loss of Rs. 282. So we are getting a loss of Rs. 272. And a loss of Rs. 288. And this is happenin

g so fast because there is a lot of volatility in the market. Because it is expiry. And because we have bought the add the money option. So the delta here is more than the out of the money option. It is 0.51. Whereas the out of the money option has a delta of 0.33. Now you can see that our loss has recovered to a great extent. And now we are getting a loss of Rs. 68. And the price has come to Rs. 49. Now you can see that our loss has recovered. And we have come to a profit. So here you can see t

hat because there is an expiry in the market, the price is falling very fast and increasing very fast. Now because I had taken this trade to explain to you that how much volatility there is in the market. So let's exit this trade. Because I have taken this trade without any analysis. So our trade has been exited. So from this example, you must have understood that when you do option trading, you get to see a lot of volatility. Because of which your stop loss is also big. And if you want, you can

also capture big targets. So if you do option trading, then it is more important to understand the loss than to understand the profit. If you find out before taking the trade that how much loss you can have in this option, then you will be able to manage your risk well. And yes, on the day of expiry, it is very important to think about the loss. Because suppose if you take a call option after doing full analysis, in which your stop loss is of 40 points. So this stop loss of 40 points is not ver

y big as per normal days. It will hardly be a stop loss of 5-7%. But if we talk about expiry, suppose the price of the option is Rs. 40 that day, then if Bank Nifty falls by 40 points and there is a delta of 0.50, then in this case, your loss will be of Rs. 20, which is a loss of 50% on your total investment. So this is a very important point which most people do not understand and they trade without thinking on the day of expiry. And in such a case, if you see even a small negative moment, then

their stop loss gets hit. So in which option you are buying a stock, this is a very important factor. But most people ignore this. And after that, without thinking, without looking at the option price, without knowing their stop loss, they trade on the day of expiry as if they see big losses. And here we have only talked about delta, apart from this, there is also a theta, which we call time decay, which is very fast on the day of expiry, because of which, if there is no big movement in the mar

ket, then also the chances of loss increases. Now here you must be thinking that if there is so much, then should I trade on the day of expiry or not? So I will give you the answer to this too, but before that, there is a zero to hero trade. Should we do this trading? In which either my money will be many times or it will be lost. So see, in 99% cases, you should not do this trade. But in 1% case, if you have kept all your calculations, in which you are taking 10 trades, and according to that, y

ou are looking at your risk to reward ratio, and there you feel that you can make a profit, and the capital with which you are trading zero to hero, that is not a very big amount, then you should think about zero to hero trade, otherwise in 99% cases, you should avoid it. So now the main thing is whether to trade on the day of expiry or not. So see, if you trade on the day of expiry with a proper plan, proper setup and risk management, then there is no doubt that on this day you can generate a l

ot of good returns, but the main factor here is how much capital you are allocating in that trade. So here you should take care because this day is very risky. So no matter how sure you are on this day, you don't have to trade with all your capital, you have to trade with a small part of your capital, which can be 5% or maximum 10%, you have to trade with that only, because here understand that if your accuracy is a little wrong, if there is any news in the market, because of which the market ch

anges its emotions, then you can see very big losses here. So once you do analysis on this thing and then decide that according to you you should trade on the day of expiry or not. If you liked the video, then after liking the video, do subscribe to the channel. The link of the free Demat account is given in the description. And if you want to learn about options trading in detail, then here you can see a playlist. You can see that playlist. Thank you.