Options Trading Basics for Indian Markets

India's derivatives market has grown rapidly, and options trading now accounts for more than 80% of daily volumes on the NSE. Yet most aspiring traders hesitate to take the leap because the terminology feels overwhelming. Let's simplify it.

Key Concepts

1. Lot Size – Defined by the exchange. For example, NIFTY lot size is 50 while Bank NIFTY is 15. You trade in multiples of the lot size.
2. Premium – The price you pay (or receive) to buy (or sell) an option contract.
3. Moneyness – ITM, ATM, OTM classification to understand intrinsic value.

Greeks at a Glance

• Delta tells you how much the option premium moves for a 1-point move in the underlying.
• Theta measures time decay – critical if you're selling options.
• Vega captures sensitivity to implied volatility changes.

Practical Checklist

• Choose a liquid contract (tight spreads, high open interest).
• Align with market structure (trend, range, breakout setups).
• Size trades to risk 1-2% of capital per position.

Trading options profitably demands discipline. Build a written plan, journal every trade, and review metrics weekly.