Intraday Bank Nifty Future & Option Tips Chain for Today& Tomorrow : Whatsapp Group & Telegram Channel working Explained
NIFTY 50 is a benchmark-based index and also the flagship of NSE, which showcases the top 50 equity stocks traded in the stock exchange out of a total of 1600 stocks. It is a blended word – National Stock Exchange and Fifty coined by NSE.
These stocks span across 12 sectors of the Indian economy which include – information technology, financial services, consumer goods, entertainment and media, financial services, metals, pharmaceuticals, telecommunications, cement and its products, automobiles, pesticides and fertilizers, energy, and other services.
NIFTY 50 follows the trends and patterns of blue-chip companies, i.e. the most liquid and largest Indian securities.
NIFTY contains a host of indices – NIFTY 50, NIFTY IT, NIFTY Bank, and NIFTY Next 50; and is a part of the Futures and Options segment of NSE which deals in derivatives.
The index reflects the general market trend for a period of time. The index is a broad representation of the country’s state of the economy. A stock market index that is up, indicates people are optimistic about the future. Likewise, when the stock market index is down it indicates that people are pessimistic about the future.
We need the index to benchmark the performance of a trader or investor. Usually, the objective of market participants is to outperform the Index.
Trading on the index is probably one of the most popular uses of the index. Majority of the traders in the market trade the index. They take a broader call on the economy or general state of affairs and translate that into a trade.
Investors also use the index to hedge their portfolio.
Bank Nifty
It represents the 12 most liquid and large capitalised stocks from the banking sector which trade on the National Stock Exchange. The Bank Nifty on NSE represents the mood specific to the banking industry. It tracks the performance of the Indian banking sector. These 12 banks represent more than 90% of the free float Market capitalisation of the banking sector in India.
The composition doesn’t always remain the same as the stocks that do not perform well and in turn, lose their market capitalisation are replaced by other banks stocks performing better and having their market capitalisation more than these underperformers.
It is computed using free-float market capitalization method with a base date of Jan 1, 2000, indexed to the base value of 1000, wherein the level of the index reflects the total free-float market value of all the stocks in the index relative to a particular base market capitalization value. In other words, the weights are assigned based on the free-float market capitalization of the company, the larger the market capitalization, the higher is the weight. Free float market capitalization is the product of the total number of shares outstanding in the market, and the price of the stock. The method also takes into account constituent changes in the index and importantly corporate actions such as stock splits, rights, a new issue of shares etc. without affecting the index.
NIFTY Bank Futures & Options
NIFTY Bank Futures:
The futures instrument is a derivative contract that derives its value from an underlying asset. In the context of Bank Nifty futures, the underlying is the Nifty Bank Index itself. Hence the Nifty Bank Futures derives its value from the Nifty Bank Index. This means if the value of Nifty Bank Index goes up, then the value of Nifty Bank futures also goes up. Likewise, if the value of Nifty Bank Index declines, so would the Index futures.
The underlying index is for obvious reasons Bank Nifty.
Bank Nifty futures contracts have a maximum of a 3-month trading cycle - the near month (one), the next month (two) and the far month (three). That means we can buy a contract in January that Expires in March. A new contract is introduced on the trading day following the expiry of the near month contract. The new contract will be introduced for a three-month duration. This way, at any point in time, there will be 3 contracts available for trading in the market i.e., one near a month, one mid-month and one far month duration respectively.
Bank Nifty futures contracts expire on the last Thursday of the expiry month. If the last Thursday is a trading holiday, the contracts expire on the previous trading day.
The value of the futures contracts on Bank Nifty may not be less than Rs. 5 lakhs at the time of introduction. The permitted lot size for futures contracts & options contracts shall be the same for a given underlying or such lot size as may be stipulated by the Exchange from time to time.
Currently, the bank nifty futures have a lot size of 25 shares. It implies, one has to buy or sell a minimum quantity of 1 lot containing 25 units and in multiple of the same.
The exchange has set 8% Margin For Bank Nifty Future
The price step in respect of Bank Nifty futures contracts is Re.0.05.
The base price of Bank Nifty futures Contracts on the first day of trading would be the theoretical futures price. The base price of the contracts on subsequent trading days would be the daily settlement price of the futures contracts.
NIFTY Bank Options:
An option gives a person the right but not the obligation to buy or sell something. An option is a contract between two parties wherein the buyer receives a privilege for which he pays a fee (premium) and the seller accepts an obligation for which he receives a fee. The premium is the price negotiated and set when the option is bought or sold. A person who buys an option is said to be long in the option. A person who sells (or writes) an option is said to be short in the option.
American and European are the most common option styles. In American Option, Buyer gets an option to exercise at any time up to the expiration date. In European options, Option can be exercised only on the expiration date itself. The options contracts are European style and cash-settled and are based on the bank nifty index.
Due to the simplicity of its expiry, European options are easier to price and analyze than American options, and properties such as the price of an American option are frequently derived from those of its European counterparts. Till 2010, in India, all options were of American style but while options were/are very popular with investors because of the limited downside (only in case of buying) in 2011 NSE decided to shift from American style to European options.
Like stocks prices, the Option prices too can be put to technical/quant analysis to arrive at different options trading strategies based on trader’s individual philosophy and risk appetite.
Just like the bank nifty futures, the underlying index is Bank Nifty.
Bank NIFTY monthly options contracts have a maximum of a 3-month trading cycle - the near month (one), the next month (two) and the far month (three). On the expiry of the near month contract, new contracts are introduced at new strike prices for both calls and put options, on the trading day following the expiry of the near month contract. The new contracts are introduced for a three-month duration.
Bank Nifty weekly options contracts have 7 weekly expires excluding the expiry week of a monthly contract. A new serial weekly options contract is introduced after the expiry of the respective week’s contract.
Bank Nifty monthly options contracts expire on the last Thursday of the expiry month and weekly options contracts expire on every Thursday of the week. If the last Thursday is a trading holiday, the contracts expire on the previous trading day.
The value of the options contracts on Nifty may not be less than Rs. 5 lakhs at the time of introduction. The permitted lot size for futures contracts & options contracts shall be the same for a given underlying or such lot size as may be stipulated by the Exchange from time to time.
The price step in respect of Bank Nifty options contracts is Re.0.05.
The number of contracts provided in options on the index is based on the range in the previous day's closing value of the underlying index.
The base price of the options contracts, on the introduction of new contracts, would be the theoretical value of the options contract arrived at based on the Black-Scholes model of calculation of options premiums.
In Bank nifty Options, traders have to pay only the Premium Amount, there will Be no Margin Situation In Buying Bank nifty Options But For Selling Bank nifty Options, Traders Have To Pay Bank nifty Future Margin Plus Bank nifty Options Premium.
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Bank Nifty Tips Whatsapp group & Telegram Channel
People are searching on the net for WhatsApp group and telegram channels for the Bank Nifty trades and our caution to such people is that these channels are run by unregistered entities and you can suffer lot of losses by not following the SEBI regd advisory services
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