Option House

Are you among the people who believe Options trading is difficult? Do you think trading in options is a gamble and requires large capital to trade? Or do you belong to a group of people who are intrigued by the potential of high returns with options but don't want to get into the technicality of Strike Prices, Expiry dates etc.? For those who think that trading in options is not their cup of tea, we have a perfect solution for you. You don't need to read multiple articles and research papers or surf through multiple youtube videos to trade-in options. Just simply log in to your IIFL Markets app and you can find Option House to simplify all your concerns.

Option House is a tool to help new users place options trades assuming no prior knowledge in options on the users' part. The only thing required from the user is to have a perception of the indices (NIFTY or BANK NIFTY). A super simple way for all users to trade and make money using options. Option House aims to break all barriers to entry for options trading while staying true to the core of the options market. An as-is representation of the options market without any jargon. NO, these are NOT recommendations - you still have to have your own view! 

How to Trade through Option House?

Step 1

 The user can access Option House from multiple sections in the IIFL Markets app i.e.

• Watchlist

• Positions 

• Charts from watchlist pins 

• NIFTY and BANKNIFTY company details page 

• Option chain

• Market Snapshot 

Step 2

Once you click on the option house in the IIFL Markets App, you will enter into a screen where you just need to select the Index (slot 1), horizon (slot 2), and your perception (slot 3) for the selected horizon (whether the market will go above or below a certain level). First, select the index that you have a view on. Then select the horizon i.e. the date by which you feel your view will be achieved. Lastly, select the value above/below which you think the index will go. Observe the entry fee and winnings while doing this. You'll notice that further, you go away from the current level of index, winning% increases and the entry fee goes down because the chances of profit decreases.

Step 3

Based on your selection, we'll provide the appropriate options contract for you to buy. After selecting Index, horizon, and target levels, click on the Let’s Trade button. This will open the order screen as a pop-up from the bottom. There you’ll see the prediction that you chose, along with the option contract that we have selected based on your prediction, with the Margin Required to buy the option contract, Available Margin and option to enter the quantity you want to buy.

Step 4

If your margin available is greater than the margin required then you can directly place the order. If the Margin Required is more than the Available Margin, you’ll see the button to Add Funds. 

Step 5 

Once you are ready to place the order, click on the Buy button to place the trade and a screen will show whether your order has been placed successfully or not.

How does Option House work?

• Option House is a tool to help new users place options trades assuming no prior knowledge in options on the users' part. The only thing required from the user is to have a perception of the indices (NIFTY or BANK NIFTY). 

• You need to select the Index (slot 1), horizon (slot 2), and your perception (slot 3) for the selected horizon (whether the market will go above or below a certain level). Based on that we’ll provide the appropriate options contract for you to buy.

• The time horizon selected by you is the expiration date of the options contracts. We give you the choice to select from 4 expiration dates - Nearest Weekly expiry, Next week’s Weekly expiry, Nearest Monthly expiry, and Next month’s monthly expiry.

• The levels shown are the breakeven levels of 20 Out of the Money option contracts - 10 CE options with strike prices more than the spot price and 10 PE options with strike prices less than the spot price. On selecting the target levels, you’re indirectly selecting the strike price of the option contract.

For CE options, Breakeven level = Strike Price + LTP

For PE options, Breakeven level = Strike Price - LTP 

When you select the target level above the current level of the Index, you’re selecting a CE option contract. When you select the target level below the current level of the index you are selecting a PE Option Contract

• On the day of expiry, if the market closes above your selected level (for CE option contract), for every 100 points above your selected level for NIFTY you will gain Rs. 5000 i.e., 100x(Lot size) and for every 200 points above your selected level for BANKNIFTY you'll gain Rs. 5000 i.e., 200x(Lot size) for BANKNIFTY.

• On the day of expiry, if the market closes below your selected level(for PE option contract), for every 100 points below your selected level for NIFTY you will gain Rs. 5000 i.e., 100x(Lot size) and for every 200 points below your selected level for BANKNIFTY you'll gain Rs. 5000 i.e., 200x(Lot size) for BANKNIFTY.

• For CE contracts, you will lose the entire amount invested only if the index closes below the Strike Price on the day of contract expiry. 

For PE contracts, you’ll lose the entire amount invested only if the index closes above the strike price on the day of contract expiry. 

• Entry Fee is the price to buy 1 lot of the option contract i.e., LTP x Lot Size.

Conclusion

We rather are making the process of trading in option contracts an easy and fun process. A beginner can learn trading option contracts through this jargon-free platform that will help them act on your views and make money on them. While doing this, over time you will learn the dynamics of the options market as you observe the cost and pay-off while the experienced traders get a super-simple representation of the option chain that will help them make decisions quickly with a clean representation of breakeven values and cost. 

So far you have seen how Option House can make your Option Trading journey a pleasant one. Then what are you waiting for? Start your trading journey now!!!

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