Intraday traders watch intraday price fluctuation of individual stocks very carefully. They buy on low prices and sell on high prices. The price fluctuation may be only by few paisa but even then it can result in huge profits if thousands of shares are traded at a moment.
There is no place for panic and greed in intraday trading. If you enter the stock trading market and everything falls out of place, don’t panic. You need to be patient and keep strict stop loss. Observe the stock market trends and enter in some other stocks. There are some day traders who will not book profit and will wait for more and more profit. In this way, these day traders can never be able to book profits. Intraday traders should book profit in every high. Then you should wait for a dip and then enter again if the trend sustains.
Advt- Get Intraday Calls
A single stock option gives the value of 100 shares of real underlying stock. There are two categories of stock options – one is “calls” and the other is “puts”. Calls and puts always move in the opposite direction. A call option rises in value with the rise in the underlying stock. It so happens because the option contract allows its holder to buy shares of the underlying at a fixed price without caring for its actual price. This difference between the contract’s fixed price and actual price determines the value of the call option. Higher the difference, more valuable is the call option. It is opposite with a put option. A put option allows the buyer to sell shares at a fixed price. Hence, it becomes more valuable with a decline in the price.
A call option can provide a way to leverage the entire stock market index or the price action of a stock. It provides an option to the traders to buy calls based on the stock instead of buying the stock directly. Calls rise and fall with the rise and fall in the stock but this rise and fall is of high percentage in the calls. There are some tips that can improve intraday call trading.
Tips on Intraday Call Trading
Intraday traders should be able to enter as well as exit their position from the stock market very quickly. In case of trading call options; you must identify the volume levels of the call and also the open interest of the call. You can obtain this information from stock option brokerage platforms. Buy call options if the open interest and volume level of that particular call option is high. It is best if both are in the thousands or lakhs.
Stock Options do have an expiry date. The expiry month of each call may be different but the expiry day remains the same which is the third Friday of the expiry month. It is not feasible to trade an option that expires in one week. It is always advised that trade an option that expire at least a month into the future. In this way, you will be able to reduce some risk of financial loss.
You should never put the same amount of capital while trading intraday stocks and intraday call options. This is so because the profit or loss of a single call option is equivalent to the profit or loss of 100 shares of stock. Even though the call option is priced at much lower price than the price of 100 shares, it creates certain amount of risk-to-reward ratio. So, while trading a call option, you should use only a fraction of the capital that you would put into the trade of a less volatile instrument.
In a nutshell, call is an option to buy shares of stock sometime in future. Call options are more profitable to the buyer if the underlying assets are moving up. There are many types of call options. The two common types are intraday calls and nifty calls. Intraday calls have validity of one day. They do not carry the position into the next day.