OPTIMAL TRADING STRATEGIES AND PERFORMANCE OF OPTIONS AT NSE

Option is the most important segment in derivatives market in India. One of the most powerful aspects of trading with options is that there?s an option strategy for almost any situation. Straddles and strangles are non-directional strategies, meaning that they have the ability to profit whether the price of the underlying index moves up or down. Financial derivatives have emerged as one of the biggest market of the world during the past two decades in terms of trading volume, number of index and stock options available for trading, participation of investors in derivatives market. It is also observed that investors are showing lot of interest in the derivatives market. However, investors have lost lot of money in the derivatives market due to lack of knowledge about the product and investment strategies etc. The risk involved in futures and options trading can be minimized / return on futures and options trading can be improvised through designing suitable investment strategies. So, investors need to develop risk management as well as risk analysis tool which is the key to limiting risks. The derivatives contract is standardized contract. In India, the BSE Sensex and S&P Nifty are the popular indices on futures and options trading. The everyday price changes will occur on underlying assets. Some of the major factors such as weather, war, Debt, refugee displacement, land reclamation and micro ¯o economic factors will affect the index prices. Options can be used to create portfolio with unique features, capable of achieving investment objectives. Keeping this view the present paper proceeds to investigate the operational strategies and performance of options trading at NSE in India.