Learn: options, risk and market hours
Plain-language guides to the terms used in OptionsQuant Labs.ai calls. Educational content only, not investment advice.
Options basics
An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying (such as the NIFTY index) at a fixed price, the strike, until expiry. The buyer pays a premium; the most a buyer can lose is that premium.
CE: call option
Gains value when the underlying rises above the strike. Bought when you expect the market to go up.
PE: put option
Gains value when the underlying falls below the strike. Bought when you expect the market to go down.
Index options trade in lots; the lot size is set by the exchange and changes from time to time, so check the current size on the NSE or BSE website or in your broker app. Profit or loss per lot = (exit premium − entry premium) × lot size, before charges.
Reading a call
- Entry: take the trade only near this premium. If the price has already run far past it, the call's risk and reward no longer match.
- Targets: levels to book profit. Many traders book part at the first target and trail the rest.
- Stop: the level at which the idea is wrong. Place it in your broker app as soon as you enter.
- Exit by: intraday calls are closed by this time even if no level is hit.
Market data we use
| Input | What it shows |
|---|---|
| FII / participant positioning | How foreign institutions and other participants are placed in index futures and options, published by NSE after the close. |
| India VIX | Expected volatility of NIFTY. Higher VIX usually means bigger moves and costlier options. |
| Open interest (OI) | Open option positions at each strike; heavy writing at a strike often acts as support or resistance. |
| Day type | Trend, range or reversal, read from the first candles of the session. |
| EMA | Exponential moving averages of price, used to judge trend direction on intraday and daily charts. |
Risk management
Size small
Risk only a small part of your trading capital on one trade. Know the rupee loss at your stop before you enter.
Always use the stop
Options can fall fast. A stop decided in advance protects you from emotional decisions.
Daily loss limit
Decide the most you will lose in a day and stop when you reach it. The loss guard in the Today tab helps with this.
Fewer, better trades
No-trade days are part of the plan. Overtrading and revenge trading are common causes of losses.
Work out your lots before you enter with the position size calculator, and see your targets in R with the risk–reward tool.
Remember
As per a SEBI study, 9 out of 10 individual traders in the equity F&O segment incurred net losses. Charges, taxes and slippage reduce returns further. Read the disclosures.
Market hours (IST)
| Exchange / segment | Pre-open | Regular session |
|---|---|---|
| NSE / BSE equity | 09:00–09:15 | 09:15–15:30 |
| NSE / BSE F&O (NIFTY, SENSEX options) | See exchange | 09:15–15:30 |
| MCX (Crude Oil, Natural Gas, Gold, others linked to world markets) | — | 09:00–23:30 (US summer) / 23:55 (US winter) |
Markets are closed on weekends and exchange holidays. Weekly and monthly expiry days are set by the exchanges and have changed in the past, so check the latest NSE, BSE and MCX circulars.
Glossary
At, in or out of the money: where the strike sits relative to the current price.
The price of an option, paid by the buyer to the seller.
The last day an option trades; after it, the option settles or lapses.
Options lose value as expiry approaches, faster in the last days.
Buy today, sell tomorrow: a stock bought near the close and sold the next session.
Closing an open position, by you or automatically by the broker near the close.
The gap between the price you wanted and the price you got.
Testing a rule on past data. Results are hypothetical and usually better than live trading.
Following a setup's calls without real money to see whether it holds up live.
The number of option or futures contracts still open, not yet closed or expired.
How much open interest rose or fell since the previous session. Rising OI with a price move suggests new positions.
Total put open interest divided by total call open interest, a rough gauge of how options are positioned.
The strike at which option buyers as a group would lose the most at expiry. A reference, not a prediction.
The volatility priced into an option's premium. Higher IV makes options costlier.
NSE's index of expected NIFTY volatility over the next 30 days, built from option prices.
How much an option's premium moves for a one-point move in the underlying. ATM options are near 0.5.
Gamma is how fast delta changes; vega is how much the premium changes when IV moves.
The underlying level at expiry where a trade neither gains nor loses: strike + premium for a CE, strike − premium for a PE.
The reward of a trade measured in units of what you risk to the stop. A 2R target pays twice the stop loss.
Levels worked out from the previous high, low and close. The central pivot range (CPR) is the band around the pivot.
Price zones where falls or rises have stalled before. They often break, so treat them as areas, not walls.
When a faster moving average crosses a slower one, often read as a change in trend direction.
Securities Transaction Tax. On options it is charged on the sell-side premium; see the charges calculator.
The number of units in one contract, set by the exchange and revised from time to time.
Index options expire every week; the last weekly expiry of the month is the monthly one. See the expiry calendar.