MARGIN FOR OPTION BUYERS! No More "Do Not Exercise" Option!

Myths & Facts around Physical Settlement for Option Buyers. How Margins work for Stock Options in case of ITM Options and CTM Options. Are Option Buyers and Sellers treated the same way?
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► TIMESTAMPS
00:00 Introduction
00:37 What if Option Buyer Cannot Pay Money?
01:11 Margin Money for Option Buyer
03:03 What About OTM Options? Hindalco Issue?
06:30 ITM Options for Option Seller?
08:46 What About SPREAD Strategies?
10:07 What About CLOSE-TO-MONEY Options?
11:17 No More "DO NOT EXERCISE" Option?
13:00 All Possible Solutions!
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#OptionBuying #PhysicalSettlement

[@aries5534]

History of things killed by SEBI. 1. Killed BTST 2. Increased the margin in futures so reduced retail participation. 3. Introduced Peak margin and thus caused unforeseen losses to retailers. 4. Introduced Peak margin and killed intraday trading, dried up volume and effectively killed the complete retail participation in MCX. 5. Killed Cash based settlement of F&O hence reduced retail participation. 6. Introduced physical delivery even with an option buy position and hence changed the standard definition of "No obligation to buy or sell" in financial markets. 7. Finally, killed DNE(Do not exercise) option for stock options, so that it can financially ruin the retail trader. Why do we need FII's destroy the markets when the country's dumb market regulator is so good at it! I guess the margin benefit rule will be on SEBI's radar next. It will say don't come to market unless you have 25 Lakh capital.

[@Subhasis44597]

Time to disband SEBI.

[@sabirdamani9618]

For item 6, "no obligation" applies only until expiry. If you don't sq-off the trade, it is understood that you want to exercise the option.

[@aries5534]

@@sabirdamani9618 Sorry but unfortunately this type of idiotic rule only exists in India. In other countries you can actually choose not to exercise it or tell the broker not to exercise it. The No obligation to buy or sell is literal, however SEBI has changed the definition of the game. They ought to win a prize for that, don't you think?

[@Subhasis44597]

@@sabirdamani9618 What happens if an index option is exercised? Does the seller have to pay money to the buyer?

[@crazyfootball2271]

@@Subhasis44597 YES

[@ranjancom2000]

Even broker agents also will not have this kng to explain this. Hats off

[@ashwin5702]

Very well explained. His first advise has to be taken very seriously and I would just add a small point in relation to his advise. Trade only in options which are very liquid like top 10 nifty50 stocks or best is Index Options. This is to avoid higher "spreads" and also avoid deeper loss due to wild movements because of less volumes in illiquid options.

[@sutapabakundi3783]

Exactly

[@nikkin608]

Is trading in indexes are safe ,? No physical delivery needed in indexes ????

[@KirtiRanjan]

@@nikkin608 highest liquidity and no physical delivery. Only cash settlement because you cant buy Index like equity stocks

[@arpansengupta7894]

The best solution is not given. Trade in next month expiry in last 2 weeks. But sometime good strike price are not available, so then you can buy future and hedge it with options (OTM) to get margin benefits

[@sabirdamani9618]

That would be solution of what? That is just a different strategy. It will not solve the problem that the trader is facing right now....i.e. on expiry, the option being ITM....

[@arpansengupta7894]

@@sabirdamani9618 what do you the solutions in videos were? As per you those are not different strategies? What mistake are you pointing to?

[@EdgewithHedge]

very well said, it's better to square off before the last week of expiry in stock options . I do the same and take position in next month ATM

[@nokiak4095]

Ok nice but may iknow why would you buy otm hedge again ? Suppose bought put 450strike price and stock went to 400rs then what are the possible solutions to avoid physical delivery

[@arpansengupta7894]

@@nokiak4095 otm hedge is only required if you dont have enough margin for future buying. Otherwise it is not required. It is actually not a hedge but just for margin benefit. I will suggest to just add a future and put option in a basket order just to see how margin reduces If you buy next month option there is no question of physical delivery. Physical delivery arises only in current month expiry.

[@nagireddy8739]

Excellent solution by Professor Sunder gwr, With the two vedios got how we should not do mistakes&How we correct it.

[@kuppusamy5]

This is really a well researched solution. Fantastic one

[@sunilpatil0503]

Thank you Mr. Sundar. Well researched and insightful. Your all these educational videos has lot of clarity, you are taking efforts to cover all angles of situation and explain it in details. Thank god , such knowledgeable experts are available and they share it without charging any fees. You have best wishes and blessings of many small investors like me, may god give you all the success you wish to reach new heights every year..

[@railtravelfanatic5578]

I have witnessed only few big names in the trading fraternity,in my life who are having such in-depth knowledge about options and are willing to pass it on in the easiest possible way to the retailer's. And the most common name is PR Sundar. Thank you so much PR SUNDAR sir. Only a few well known people like you bring some clarity and understanding to the small and retail trader's like us when it comes to options trading.

[@satishp5440]

No word to say something , great explanation to solve all option problem

[@caadityarajan]

Extremely meaningful and deep insight. Thank you so much sir 🙏🏼

[@balveergupt2391]

Trading in stock options is much better and safer, compare to index option.. Hindalco case was exception..and keep this in mind to square off all stock option positions before one day of expiry . Rest nothing to worry...

[@sabirdamani9618]

Stock options are high-risk, high return instruments. It's never "much better and safer"...

[@Subhasis44597]

Stock options has zero liquidity.

[@chandug4u]

I remember in July 2021 expiry.. Dr rdddys fell from 5400 to 4800 in last two days which made 2Rs put option became 400Rs.. which is 200 times.. stock options are very dangerous... who would expect more than 10% fall In a reputed stock.. stock options are highly manipulated in last week of expiry as per my observation..

[@kanhaiyajha6482]

@@chandug4u there is very less resources in the Indian context too

[@aniketgharpure94]

I would say take next month options in last week of the month. Don't trade in options in last week of the month.

[@12345ngb]

Most brokerage players don't allow stock options to be bought on the last day of expiry for ATM and near strikes OTM. In this case it's totally the fault of the broker that allowed to buy

[@abhisheksharan836]

He would have bought early

[@arpansengupta7894]

Who are these most brokers? Zerodha allows and I havd bought option on last day myself.

[@AdityaKumar-hb9fi]

@@arpansengupta7894 bhai, you must have sufficient money in your zerodha, I use zerodha also, they demand full margin money for itm or atm put buy

[@arpansengupta7894]

@@AdityaKumar-hb9fi yeah that is true, but I thought you mentioned you cant buy the options which is not the case. Since Nov SEBI brought another idiotic rules and this is kicked in

[@dr.raymond8]

@@arpansengupta7894 what you need is a Financial Advisor

[@RK-he6kd]

Extremely valuable and Exceptional content. Thank you so much, one of the best explanations I've received.

[@chiragjogi8430]

Explained very nicely and mature way.. Thank you sir..

[@pradeepdeshpande3845]

PR sir another one full of knowledge video, thanks a million. Request you to have one video on futures buy and sell too...as ample videos are available on options but very few on futures. What are pros and cons, care to be taken while dealing with futures etc....

[@bvs.ravikumar235]

Many thanks for great explanation of the concepts with case study and your suggestions to manage such situations.

[@MrSudeepantony]

I think not even people sitting inside NSE or BSE know about these things that you explained. You are a real gem for explaining this to the Layman.

[@dilipupadhyay2083]

Excellent teaching. I learnt and enjoyed new information. Well done

[@deivas1425]

Well explained.. it will be very useful for option buyer/sellers- Do's and Don'ts.. Great Sir.. Please continue the same.. 🙂

[@rajendranikumbh3230]

Very much enlighten by your explanation, hats off to you sir. Even so call expert option Buyer / seller may not know this..The last one was icing on the cake.

[@mpd1454]

In negative crude ftures price fiasco in april20. Most small client did not have money and broker sent legal notice but unable to get as filing suit and enforcing judgment is next to impossible if it's small due amount of 2 or 3 lacs. As our court cases takes several years.

[@thoshibadevielangovan5588]

This is the eye opener for me. Thank you so much.

[@nandhu63]

superb explanation. Sir.. What a knowledge and how simple you are making us understand. hats off.

[@bsgtscftitans]

In trying to reduce the volatility and protect retail traders..don’t you think that SEBI has gone overboard with margin requirements…due to such rules, there will not be a healthy set of buyers in the week before expiry..thus trapping some unlucky traders off guard?? Such rules are clearly affecting the fundamentals of demand and supply..and spoiling the whole balance

[@ruchirbhadani]

Decrease the position size is only the solution. And don't think about margin rule concentrate in earning daily money

[@ysdnsingh]

@@ruchirbhadani Decrease position size and make institutions more powerful in the market.

[@ruchirbhadani]

@@ysdnsingh Dude we have no choice either put more money or manage risk.

[@1aZoOs]

Margin rule is the best rule SEBI has implemented, they have saved so many lives and livelihoods.

[@bsgtscftitans]

@@1aZoOs agree..but the problem is that ppl think they will get rich overnight in option trading..and get carried away and lose money…but why sudden shift to physical delivery..what was wrong with cash settlement..its a derivative contracts anyways..so why involve the underlying share at expiry??

[@rajavasudevan1351]

Thank you ! Really needed the answer to these questions . will take up the first solution .🙊

[@anandhik.j1142]

Perfect explanation with perfect solution.Thank you sir.

[@kkm316]

Very clear teaching in current context. Thanks.

[@MrSuresh1320]

Great knowledge sharing Sir, really appreciate and giving value to your subscribers is something great n much appreciated❤🙏

[@sunilvarma2410]

very informative video. Thank you Mr. Sunder. Will you please explain STOCK LENDING MECHANISM please.

[@sachinvkumbhar19]

Thank you for such a great explanation.

[@pragatibroadcastingonline34]

GREAT . VERY WELL EXPLAINED & GUIDED. like I have ask you in your video also that " from where can we learn all the rules of trading in all three segments" As you mentioned " do not won't to excercise" facility stoped from nov'21 from where can we know the prevailing rules of INDIAN STOCK EXCHANGE. Pls Guide

[@raviv4224]

You are the "BEACON" of our option trading ஆப்ஷன் என்னும் பெருங்கடலில் கலங்கி நிற்கும் எங்களுக்கு "கலங்கரை விளக்கு" நீங்கள்

[@shwetaarora6421]

As always insightful and to the point 👍

[@aries5534]

Mr PR Sunder, this case is the result of utter failure of market regulator, i.e SEBI to implement the policies correctly and not the case of retail traders. By the way you are saying it, you don't want any retail participants with capital below 25 lakh to operate in the market.

[@niftywisetraders]

Well explained and thank you so much sir. When it’s far OTM call or put option will there be any problem?

[@shivashankar5619]

Nowhere can we find such knowledge on youtube, good work for retail traders

[@mohammedsajjad577]

Always something new to learn. Thanks Mr. Sundar!

[@nagendrakumarbn4717]

Respected Sir, It is eye opener for options buyers. Thanks a lot for educating . I request you kindly to make series of videos of this kind. Regards 🙏🙏🙏

[@rahimuddinshaikh6021]

Excellent teacher , thanks.

[@anbumalargale9230]

Well explained . Very much thankful for your advice and teaching..

[@ephraimsuresh5398]

Knowledge is money... Thank you sir...

[@mallikarjunarao305]

Thank you for spreading awareness

[@eleswararaomylangam2806]

Dear Sundar You are good hearted, smart minded man. That is why Goddess Lakshmi is blessing you and your family every minute and complemented you Rs 5 lakhs for other option buyer unacceptable greediness. You are doing exceptional service in educating ignorant in stock market. With best wishes all the time Rao

[@sabirdamani9618]

That story seems little fuzzy... If he sold 1 Lakh stock options, and say if the lot size is 1000 then there could be in theory 100 buyers of those suntv puts.... Does he mean to say none of them would take 6 Rs. when the option was 5 Rs. ITM? Seems far fetched.

[@Sandydarj6612]

Informative content with lots of simplicity

[@arvindk261193]

Counter position was completely new to me. Thanks a ton sir

[@sudarshansudhu765sudhu7]

Mr. P R sundar is encyclopedia of Stock Market👌👌👌

[@JobinRajuGeorge]

You are an options encyclopedia! Thank you! :-)

[@nvasanthakumarnanjundan6513]

Good explanation on recent update on 'option buying & selling' Thank you.

[@petersalazar1790]

Very valuable advice. Thanks Very Much Sundar Sir. Many have knowledge, few share it !

[@cutehomesrealtors8477]

You are my GOD in stock market... I was wandering to get a clarification on all these points you explained here, since long... Finally GOD gave me answer.... Thanks PR Sir.. You are a GEM....

[@AdityaKumar-hb9fi]

Same here

[@kulwantsingh2010]

Very informative I could not understand most situations in nse site which you have explained so nicely

[@sanjivb53]

Saved this to Google Keep, for repeated reference in future. Very useful. Thank you Sundar.

[@subodhkumar-nb3eh]

Great Personality with in-depth knowledge.

[@ankitbharti4198]

Thanks sir for the solution regarding liquidity issues.

[@sachinsharma9874]

Extremely helpful and excellent explanation for some of the most difficult topics in the trade... Thank you Sir 🙏🏼😊

[@nitinjagtap5613]

I have a question , about taking counter position, assume that i holding 2 demat accounts with seperate brokers & can I use to hedge each other positions in case of such event ? I know answer is no ideally, but if in case of ipo application they consider PAN number even apply from multiple sources, they why not such rule applicable here to settle such issues.

[@prashanthk.6843]

This were somethingd unknown. Thanks a lot for the info.

[@raghuk3141]

Sir very Valuable knowledge for many of option people fears thank you

[@vadlamudikrishnaprasad5726]

సుందర్ గారు మీ ఈ వీడియో మాకు ఎంతో నేర్పింది,మీకు మా ధన్యవాదాలు

[@devarajr5281]

Sir time and again you are proving that you are the one and only God for the entire retail trader as well as innocent wealthy traders by simply presenting such valuable guidence. Hatsoff once more

[@rahulagarwal7182]

What a Clear Knowledge he has. Great ..Love the video. This is called content.

[@YeswanthVolgs]

Thank you Sundhar for well explained.

[@damodarankrish6945]

wonderful sir.. Always rocks.. tell us about brokers risk associated , like we have shares in demant account and some money in trading account... in case, due to whats so ever reason, brokers runs out / closed, what will happen to our shares and money in that broker? pls explain us and advice...

[@madhukar31236]

Terrific Video Sir, unbelievably helpful.

[@sameekghosh]

Highly beneficial information. Thank you. Now I am more determined to keep trading in Stock Options. Thanks to your Risk Mitigation strategies. Oh yeas! The first strategy is rejected. God bless you.

[@pradyumnas7068]

in previous video , we saw how a huge loss happened because of stock option. At the last moment, it became ITM and the person had to give delivery

[@Subhasis44597]

Don't use stock options. Use index ones.

[@gaikwadr99]

Perfect sir. This is what I was looking for. But couldn't see any such details anywhere. You have explained in very detailed manner. Thank you very much .

[@PraveenKumar-uv8cy]

Wow sir….I’m getting so much of knowledge from you…Thank you so much

[@dr.sreenivasparuva3317]

Excellent resource for many traders

[@alphaomegaoffinance5725]

They say u r expert in the subject if u can explain it in simple terms to 5yr old. I have zero knowledge on F&O and the way sir explained it was so simple and detailed and even I could understand and corelate. OSM sir. Grateful for sharing ur knowledge and experience

[@karthikvpc]

So in case of Hindalco when there was zero volume for the ITM 450 PUT, the option buyers could have escaped by buying equal lots of ITM call where ever there was volume, say 440 CE ?

[@myblueocean12]

That should have cancelled each other but don't know what are exchange rules It will be appreciated if someone elaborate on this

[@nikhildhargawe5192]

As always we got much more information, some important information, some insights in practical world where no testbook defination changes, and most of all every point was backed by the personal experience which adds more value to what's being delievered.

[@rupeshn1004]

The most educational video on KZbin ever. Great

[@bala9963823823]

I am very much benefitted with this video sir. Thank you very much for your support for innocent traders

[@vinaykumar-dv3bt]

Great knowledge sir. Hats off to you

[@ajaybn]

Excellent display of knowledge

[@tarunrathore2476]

Really informative. Thanks a lot.

[@srinim5637]

Full knowledge session..... every point is very important...Every trader should learn

[@sureshkumarm4173]

Thankyou for detailed explanation.

[@icomedu.4689]

So beautifully explained to many of us who are new to options trade !! Kudos sunder sir

[@stockcartel]

Thanks for the knowledge.

[@ShivaRaj_yadiki]

Sir what if we buy an ITM option and Sell OTM option will it be Squared off ?? vice-verse

[@angelkaushish4161]

Thank you for this valuable information

[@arul8750]

complex situation explained with style thankyou sir

[@nayanpawar3207]

I watched these two videos of you and I felt relaxed because I m looking for this information from so many months. But I like to know what happens in Nifty and banknifty options. You explained it in small amount but it will be of great benefits if you explain it in detail.

[@rajakumar-gh3fd]

OPTIONS in index are cash settled and can be allowed to expire without covering. The resultant profit or loss will reach your account automatically. Hence, sir always advise to trade in OPTION indices

[@FUNDACHART]

Real Teacher explain very easy process. Thanks you so much Sir.

[@mukeshjain7149]

Gerat knowladge and si simple you share To public. Even sone brokercdo not know all the solution. Gerat person.

[@vikcontact1]

Thank you for every information. thank you..

[@kayyuriharinath2832]

Very useful information to Stock Option Traders.

[@arunagirisundararaman5473]

Your knowledge is great & deep

[@parshuramdesai7021]

very well explained sir, thank you for the insight. Where can we find this circular where SEBI abolished Do not exercise opiton?

[@ruchirbhadani]

Trade on Monday Tuesday and Friday Wednesday Thursday for equity

[@totheshaaan3583]

Sir, can we take the tcs option strategy that you made a day before the results.... To last day expiry??

[@padmanabhanh9962]

Very useful tips.Thank you

[@MarketWisdom_MH12]

That Hindalco guy we,should,hv pay something to demo us these things and Thanks,Sundar Sir for,explaining.

[@KrishnaKumar-hw4ps]

Excellent explanation. Hats off you sir.

[@prajeev6557]

Very worthable one 🔥,,,,tq sir, Happy sankranthi

[@learnexcel1102]

thank you sir for share your valuable knowledge with us.

[@montumckvie]

I am very much inpressed after seeing this video...I was looking for one answer which I got in this video...Thank for sharing Mr Sundar again

[@sathishnagaraj7203]

Once again thanks for the information/awareness for retail traders. But you did not talk on what to do with physical delivery?? Will it be useful in anyway?

[@Subhasis44597]

Not usefull at all.

[@imbajetha852]

Great knowledge imparted👍