Hello, friends,

Today I am going to talk about some basics of Options & it's

Buying. These are basic points and already known to many,
but let's discuss them before we discuss the tough points.

If you don't know what's an Option then let me clarify, Option is

a derivative of an underlying assets which lets you (or say gives
you the right to) buy/sell the assets at a particular price in future,
by paying a small premium.

You know it by CE or PE.If you're Bullish about a Stock, you Buy

Call Option (CE) or Sell Put Option (PE) & if you're Bearish about a
Stock, you But Put Option (PE) or Sell Call Option (CE) but today
we'd only discuss Buying Options. When to Buy Call Option?

You buy Call Option when you're Bullish about a stock. For
example, if you're Bullish about #RELIANCE that it's going to rise
to say 2900 (CMP 2700) in December Series, you may plan to buy
2700 CE of December series by paying ° premium of that
Particular option. You're locking that particular price of stock for
the number of shares assigned per lot. We've 250 shares per lot
in 'RELIANCE F&O Contract.

Copyright ©2023 Metaverse Trading Academy | metaversetradingacademy.com

If the Option is ITM (In the money), Option price would rise in
line with the Stock price. So, by paying a small premium, a trader
can lock the 1 gains w.r.t. the number of lots in 1 lot.

If you're u capital is 54K, you may buy 20 Shares and your gains
would 200/share, so you'd earn 4000 on at total investment of
54K once stock hits 2900. However, gains in Option Buying would
be much more as Premium paid is much less than ' the
underlying assets itself.

Then what's the risk? And is it as easy as it sounds?

Assuming the stock rose to the levels you calculated, your Option
would increase, and you'd be in decent gains. But 2 things which
can Option Buying are...
1. Stock moving against your direction
2. Consolidation
3. ViX

Copyright ©2023 Metaverse Trading Academy | metaversetradingacademy.com

1. If stock moves against your direction, you'd lose out on the
premium you've paid for the underlying assets. Many low capital
traders prefer Option Buying because it requires less capital &
losses are limited, but ironically, Option Buyers are major losers
in this Zero-Sum game. Majority of the time, Seller (Writer) wins
the game, but that's for another day. So, whenever you enter a
position, make sure you're clear of the direction you're buying
Option of. Call for Bullish Trade & Put for Bearish Trade.

2. Consolidation kills the Option Buyers and, major friend of

Option Sellers. Option Buying Majorly depends on Gamma. If
you're clear of me. I the direction, you can buy the Option. But
what i if you're not clear and just bought the Option r• and stock
is under consolidation, means it's not rising or falling much? In
that case Option • Price would not move much, and time would
kill *, the premium (theta decay.) So, make sure you 1. enter the
Option only if you're clear of the move you think would happen.
Don't enter 41 option of the stock which is under consolidation.

ViX is an index of Volatility its major component used while

calculating the price of Options Premium. Higher the volatility,
more the price of Option and vice-versa Major Players buy
during low ViX and sell during high ViX (last Friday was such an
example)

Copyright ©2023 Metaverse Trading Academy | metaversetradingacademy.com

When to enter Option Buying?
1. Find the stock which are in trend, ready for Break Out or
already have broken out.

2. Find the Cash/Fut levels of the Assets as your Entry/Target/SL.

If entry triggers in Cash/ Fut, enter the Option irrespective of the
price of Option. Similarly for Target & SL.

3. Don't plan to enter Option for multiple days. Intraday to 3

days at max, that's it. (Unless you've bought an OTM and waiting
for a mega move but that rarely happens, you can't count on
that every time).

4. Keep multiple targets. After achieving 1st Target, keep the SL

at cost. After achieving 2nd Target, keep the SL at 1st Target and
so on... (for low capital traders, better to Target small gains and
book consistently to build capital. Once decent capital is built
with enough confidence, one can slowly increase the position
sizing) .

5. As mentioned above, don't enter stock under consolidation.

6. Last but most important point, don't enter Option Buying if
you're low capital trader thinking you'd only lose out on
Premium. That's also your hard-earned money. Plan your trade,
execute the plan and earn. Take it as a business not a money-
making Machine. It may soon surpass your main Money source
of you do it effectively without any greed. Use the gains to invest
rather than increasing your position size.

Copyright ©2023 Metaverse Trading Academy | metaversetradingacademy.com

Read all the points carefully and let me know if you've any
questions. I'd love to help you practically as well. Give me like if
the I message has been passed properly.

Would add one more point and a very important one....

Many make decent gains in Option Buying. Sometimes 2X, 5X or
even 10X. Problem is, this seldom happens. So, whenever this
happens, a Buyer consider himself/herself immune to losses and
increases position sizing. Remember, with greater Positions
come great risk as well. Always remember to be in your limits
whenever you enter a position. Even the calculated risk should
be less than half of your total risk-taking capacity. Whenever you
get lucky and get decent gains, more than you thought, use the
additional gains to invest in stocks or keep the capital as it is but
don't over leverage yourselves.

Thank you.

Regards,
Vikas from Metaverse trading academy

Copyright ©2023 Metaverse Trading Academy | metaversetradingacademy.com

GET EMPOWERED TO TRADE THE
STOCK MARKET
FOR MORE TRADING TIPS, ATTEND A FREE WEBINAR:

1 Find out what strategies successful traders are using to

see quicker returns on their investment.

2 Get a live market review with a stock analyst that shows

you simple techniques that have been proven profitable
to all MTA students

3 Learn how you could fit the stock market into your
lifestyle.

REGISTER NOW

Copyright ©2023 Metaverse Trading Academy | metaversetradingacademy.com

METAVERSE TRADING ACADEMY
Creating Successful Traders
That’s our vision. Often referred to as Metaverse Trading
academy, is a financial education and training company
based in Rajkot, Gujarat. We provide education to beginner,
intermediate, and advanced traders.

For many, MTA is synonymous with high standards, effective

teaching, sound instructional materials, and a dedicated
commitment to performance-oriented results.

For more information, visit metaversetradingacademy.in

Copyright ©2023 Metaverse Trading Academy.

Trading exchange on margin carries a high level of risk, and may not be
suitable for everyone. Past performance is not indicative of future results. The
high degree of leverage can work against you as well as for you. Before getting
involved in foreign exchange you should carefully consider your personal
venture objectives, level of experience, and risk appetite. The possibility exists
that you could sustain a loss of some or all of your initial deposit and therefore
you should not place funds that you cannot afford to lose. You should be aware
of all the risks associated with foreign exchange trading, and seek advice from
an independent financial advisor if you have any doubts. The information
contained in this web page does not constitute financial advice or a solicitation
to buy or sell any Forex contract or securities of any type. MTA will not accept
liability for any loss or damage, including without limitation any loss of profit,
which may arise directly or indirectly from use of or reliance on such
information.