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The NIFTY 50 index is a free float market capitalisation-weighted index.. Stocks are added to the index based on the following criteria: [1] Must have traded at an average impact cost of 0.50% or less during the last six months for 90% of the observations, for the basket size of Rs. 100 Million.
The trader may also forecast how high the stock price may go and the time frame in which the rally may occur in order to select the optimum trading strategy for buying a bullish option. The most bullish of options trading strategies, used by most options traders, is simply buying a call option. The market is always moving.
Trading in Mini Nifty Futures & Options and Long term Options on NIFTY 50 are also available. [43] The average daily turnover in the F&O Segment of the Exchange during the financial year April 2013 to March 2014 stood at ₹ 1.52236 trillion (US$18 billion).
Options Clearing Corporation's (OCC) Options Symbology Initiative (OSI) mandated an industry-wide change to a new option symbol structure, resulting in option symbols 21 characters in length. March 2010 - May 2010 was the symbol consolidation period in which all outgoing option roots will be replaced with the underlying stock symbol.
By selling the option early in that situation, the trader can realise an immediate profit. Alternatively, the trader can exercise the option – for example, if there is no secondary market for the options – and then sell the stock, realising a profit. A trader would make a profit if the spot price of the shares rises by more than the premium.
LEAPS are often used as a risk reduction tool by investors. For example, in an article in Stocks, Futures and Options Magazine, Dan Haugh of PTI Securities & Futures suggests that stock investors can manage risk and price protection by considering the purchase of an exchange-traded fund (ETF) and "...buying put protection on that ETF with LEAPS."