Buy Options using TA

@FTUTRADING
 Important TA Patterns
• Channel
• Triangle
• Flags
• Double/Multiple Tops/Bottoms
• Trendline
Channels
Triangles
Flags
Trendlines
Double/Multiple Tops/Bottoms
 Basics - Options
• Call Option
• Put Option
• Strike Price
• Time to Expiry
• Premium & Payoff
• ITM
• ATM
• OTM
Call & Put Options
Strike Price: ITM – ATM - OTM
Time to Expiry
 Premium
In a real-world scenario, when LIC is insuring your life for 10000 Rupees a
year, it is taking a bet that you will not die in the insurance term. If you die,
LIC has to pay a hefty sum to your inheritor/ dependant. The
compensation you pay LIC to take this risk is the premium.
Options are just insurance contracts. A person selling an option is saying
something unlikely will not happen, and a person buying insurance is
saying it will happen.
Example.
NIFTY 11000 Call option makes money when Nifty crosses 11000. So an
option seller there is betting that NIFTY will not cross 11000 and a buyer is
betting that it will.
The option seller has to pay the buyer some money if it crosses 11000. So to
compensate for the risks the seller is taking, the buyer has to pay some
money.
This is basically the idea of premium. The compensation for a risk.
Payoff
 When to Trade?
• Low Risk Setup
• Liquidity
• Beginning of new expiry
 When not to Trade?
• Illiquid Counters
• Avoid last 10-12 days before expiry
• Events
– Quarterly Results
– Corporate Actions (bonus, dividends)
– Mergers, Demergers & Acquisitions
– Government Policy Announcements