Volume and open interest are two of the most important technical metrics for understanding options and the broader market. The amount of contracts exchanged in a given period is referred to as "volume," whereas "open interest" refers to the number of contracts that are active, or not settled. We'll look at these two variables and give you some pointers on how to utilise them to better understand trade activity in the derivatives markets. But before we get into that, there is one thing you will require: the best Indian trading platform with a wide range of features. With Zebu, one of the best stock brokers in the country, your online stock trading journey will be drastically enhanced. Volume In the stock market, volume refers to the number of times shares are traded between buyers and sellers. The volume metric for options markets gives the number of options contracts bought and sold in a given trading day, as well as the degree of activity for a specific contract. Every transaction counts against the daily volume, whether it's an opening or closing transaction. The higher the volume, the more people are concerned about security. Volume is often used by investors to determine the strength of a price movement. More volume also suggests that the contract has more liquidity; this is advantageous in short-term trading because it means that there are more buyers and sellers in the market. Assume that the volume in call option ABC with a strike price of Rs 1000 and a three-week expiration date did not trade any contracts on a given day. As a result, the trade volume is zero. An investor buys 15 call option contracts the next session, and there are no other trades that day, thus the volume is now 15 contracts. The volume and open interest measurements reveal the amount of buying and selling that supports a prospective price change. In technical analysis, however, it is also necessary to determine whether the open interest is in calls or puts, as well as whether the contracts are being purchased or sold. Open Interest The quantity of options or futures contracts owned by active traders and investors is known as open interest. These positions have been created, but they haven't been filled, expired, or exercised yet. When buyers and sellers (or writers) of contracts close off more positions than were opened that day, open interest declines. A trader must take an offsetting position or exercise their option to close out a position. When investors and traders open additional new long positions or sellers take on new short positions in an amount bigger than the number of contracts that were closed that day, open interest rises once more. Assume that the open interest in the ABC call option is 0 for example. The next day, an investor opens a new position by purchasing 10 option contracts. The number of people who have expressed interest in this particular call option has now reached ten. Five contracts were closed the next day, ten were opened, and open interest grew by five to 15. Open interest, along with other variables, is used by technical analysts to determine the strength of a market trend. Increased open interest signals the entry of new traders into the market and can be used to corroborate a current market trend. The current trend may be deteriorating as open interest declines, indicating that traders are closing their positions. Particular Points to Consider We've listed a few situations that include the volume and open interest indicators, as well as some possible interpretations. Rising prices during an uptrend, combined with rising open interest, can indicate that new money is entering the market (reflecting new positions). If long positions are fueling the growth in open interest, this might be an indication of a bullish mood. If, on the other hand, open interest falls while prices rise during an advance, this could imply that money is leaving the market, which is a bearish indicator. If, on the other hand, open interest falls while prices rise during an advance, this could imply that money is leaving the market, which is a bearish indicator. Prices falling in a downtrend while open interest rises could indicate that new money is entering the market on the short side. This scenario is negative since it is consistent with a continuous downtrend. However, falling prices in a downtrend with declining open interest may imply that holders are being compelled to liquidate their positions, which is a bearish indicator. If open interest is high as prices are falling sharply during a market peak, it could be a bearish indicator if those who bought near the top are suddenly losing money; this could also create a panic selling scenario. Option Chain And Its Working An option chain is a table that lists all of the available options for a certain security. An option chain displays all of the published calls and puts for a given expiry date, organised by characteristics such as strike price, expiration date, volume, and pricing. How much open interest and volume should an option have? In general, a high volume and open interest both indicate a liquid market with a large number of buyers and sellers for a specific option. Market mood can also be confirmed by changes in open interest and volume. A rising price with increasing volume and open interest, for example, indicates a robust market, whereas a rising price with declining volume and open interest indicates a weak market. When the Volume Exceeds the Open Interest, What Does It Mean? If an option has a high volume but a low open interest, it has a limited secondary market, which means it may have low liquidity. A trader trying to sell that option might have trouble finding a buyer, or they might face a wider bid-ask spread than usual. What Does a High Open Interest Indicator Indicate? A huge number of traders have taken active positions in an options or futures contract with a high open interest. If open interest rises over time, it indicates that new traders are taking positions in the market and that money is flowing in. When open interest decreases over time, it indicates that traders are beginning to close positions.
Mar 18, 2022
The market capitalisation of a company helps in determining its worth. It's computed by multiplying the number of existing shares by each share unit. The market capitalization of large-cap firms exceeds Rs.20,000 crores. The NIFTY 50 index contains the top 50 large-cap firms in India. This index includes the most actively traded companies on the stock market. Large-cap firms' stock prices cannot appreciate as much as mid-cap and small-cap companies' stock prices. This is due to the fact that large-cap company valuations have attained financial maturity. Dividend payouts account for the majority of such equities' returns. Because there is always someone willing to purchase such well-known and popular stocks, large-cap businesses provide significant liquidity to their investors. On the stock exchange, blue-chip stocks are highly valued. They have a strong market reputation and a solid financial track record. Blue-chip stocks are frequently referred to as the stocks of the largest corporations in the economy. However, before you start investing, it is important that you do so with one of the best share brokers in the country. At Zebu, we have the lowest brokerage for investments and also support you with a highly advanced online trading platform to help you analyse stocks and execute your trades. The primary distinction between large-cap and blue-chip firms is that the latter is the market leader. Blue-chip stocks are well-known in addition to having a significant market capitalization. Large-cap corporations can be well-known or not, whereas blue-chip companies must be well-known. Blue-chip enterprises are well-known in the marketplace and hence have a high brand value. A blue-chip company's stock has reached its maximum growth potential. As a result, blue-chip investors see a slow but consistent increase in their invested capital over time. Because the firms that issue these stocks have many sources of income and have spread their operations to multiple industries, blue-chip stocks can help you diversify your portfolio rather well. As a result, they are less vulnerable to market volatility, making them a low-risk investment alternative. By diversifying your investments even more, you can further lower your risk exposure. During peak business cycles, large-cap corporations are often blue-chip companies because they generate consistent revenue. When compared to blue-chip corporations, large-cap companies are a riskier investment alternative. Despite having a huge market capitalization and good revenue, large-cap corporations have yet to stabilise on such business peaks and maintain them in the long run. Two of the most important checklists for first-time traders and investors are the right online trading platform and the lowest brokerage for investments. As one of the best share brokers in the country, we at Zebu will give you all of this and more. To know more about our services and products, please get in touch with us now.
Mar 17, 2022
There's an interesting backstory behind India's sovereign bond issuance. The idea was approved in the Union Budget around two years ago, with a goal of raising up to $10 billion through sovereign bonds. Internal opposition grew, and the proposal was eventually scrapped after the PMO interfered. In this context, the Indian government's recent plan to issue $3.3 billion in sovereign green bonds is significant. Sovereign green bonds are similar to any other government-issued sovereign bond. The only difference is the use of the cash raised, which can only be used for activities and initiatives that reduce carbon emissions, such as renewable energy, green hydrogen, and rechargeable batteries. These green bonds have a reduced cost of capital because they provide carbon neutrality benefits to their buyers. The problem is likely to debut in the market in the first or second quarter of FY23, with the finer specifics to be revealed later. This will be the first tranche, and if there is sufficient demand for green bonds, the centre may consider selling more than $3.3 billion in green bonds. This problem represents a significant shift in the Indian economy's commitment to a low-carbon future. Costs and other details are still being worked out. To some extent, India's venture into green bonds mitigates the risk of sovereign bonds. Because sovereign bonds are usually denominated in hard currencies like the US Dollar or the Euro, they tend to increase the issuer's liabilities if the native currency falls. This step will also help India achieve its objective of becoming carbon neutral and net-zero emissions by the year 2070. While the 10-year benchmark sovereign bond yield is currently about 6.85 percent, the government expects to be able to borrow at a lower rate through green bonds. That will be the key draw, because it may not make sense for India to take on the risk of national debt unless the difference is large enough. This is in line with the global surge in renewable energy, sustainable business models, and sustainable strategy. Indian conglomerates such as Reliance and Adani have committed billions of dollars to green projects such as renewable energy, green hydrogen, electric vehicle batteries, and electric vehicle ecosystems. India, the world's third-largest emitter of greenhouse emissions, wants to double its renewable energy producing capacity by 2030. The timing is right for the launch, with global investor and lender enthusiasm for green firms at an all-time high.
Mar 16, 2022
The 200-day moving average, a simple line that is displayed across a chart, is considered an important tool for traders and investors to determine the trend of the market. The indicator shows as a line on a chart that rises and falls in sync with the stock, commodity, or other instrument being charted as longer-term price movements. Before you start investing or trading, always consider going with one of the best brokerage firms in the country like Zebu. As a top broker in share market we have created one of the best stock trading platforms, for you to use and invest. When the price is above the moving average, the 200-day SMA appears to act as an incredible support level, and when the price is below it, it appears to serve as a resistance level. The 200-Day SMA The 200-day SMA is often used in stock trading to detect the broad market trend. It covers around 40 weeks of trade. A company is generally regarded to be in an overall uptrend if its price continues above the 200-day SMA on a daily time period. A 255-day moving average, which covers the preceding year's trade, is a popular alternative to the 200-day SMA. The 200-day SMA is a very long-term moving average that is frequently used in conjunction with other, shorter-term moving averages to display not only the market trend but also the strength of the trend as measured by the distance between moving average lines. Comparing the 50-day and 200-day SMAs, for example, is rather frequent. When moving average lines converge, it can imply a lack of clear market momentum, but increasing the distance between shorter-term and longer-term moving averages usually implies increased trend strength and market momentum. Death Crosses and Golden Crosses The 200-day simple moving average is regarded as such an essential trend indicator that a "death cross" occurs when the 50-day SMA crosses below the 200-day SMA, indicating a downtrend for the stock. In a similar vein, the crossing of the 50-day SMA to the upside of the 200-day SMA is known as a "golden cross," and the stock is regarded as "golden," or almost certain to gain in price, once this occurs. SMAs vs. EMAs Simple Moving Averages vs. Exponential Moving Averages It's likely that the 200-day SMA has a self-fulfilling prophecy quality to it; markets respond strongly in response to it partly because so many traders and analysts value it so highly. However, some traders prefer to use the exponential moving average (EMA). An EMA provides a higher weight to the most recent trading days than a simple moving average, which is calculated as the average price over the selected time range. For example, the exponential moving average provides current prices a higher weighting than the basic moving average, which gives all values equal weighting. Technical analysts use EMAs and SMAs in comparable ways to recognise trends and identify overbought or oversold markets, despite the differences in methodology. How is the SMA calculated? The average closing prices of a security over a period of time are used to calculate a simple moving average (SMA). It's used to smooth out price swings and provide traders a better understanding of trends and reversals. How do I find a stock's 200-day moving average? With Zebull Smart Trader from Zebu, you simply have to change the time frame to 1 day and add the moving average indicator. In the settings, you can change the period to 200. This will overlay the 200 day moving average over your chart. As one of the top brokers in share market, we have created the best stock trading platform for you to invest in wisely. Our tool is designed to help investors and traders alike to analyse a company with a wide range of indicators and screeners as per your strategy. As one of the best brokerage firms in the country, we invite you to open a trading and investment account with us.
Mar 15, 2022
Commodity trading has a long history in India. The Bombay Cotton Trade was established in 1875, marking the first significant milestone. Then, in 1991, came the liberation policy, which boosted commodities trading. Futures were reintroduced in 1994 after being discontinued owing to war and food shortages. Agricultural goods were included as a result of the reintroduction. Before we get into the benefits of trading in commodities we would like you to know that at Zebu, one of the fastest-growing brokerage firms in the country, we have created the best Indian trading platform with the lowest brokerage for intraday trading. Commodities are traded on six markets in India. They are as follows: MCX stands for Multi Commodity Exchange. NCDEX stands for National Commodity and Derivatives Exchange. NMCE stands for National Multi Commodity Exchange. ICEX stands for Indian Commodity Exchange. ACE stands for Ace Derivatives Exchange. UCX stands for Universal Commodity Exchange. When it comes to market share, MCX has a 70 percent stake, NCDEX has a 25 percent share, and NMCE has a 5 percent share. Here are a few benefits of commodity trading in India: 1. A Reliable Option in a Crisis There aren't many people interested in trading commodities. A trader, on the other hand, may consider investing in metals such as gold, silver, platinum, and other precious metals. In times of inflation and economic uncertainty, these provide security. 2. Diversification of your portfolio If you're an investor who already invests in equities and bonds, you might want to examine commodities as well. You can diversify your portfolio and develop a risk-adjusted strategy this way. 3. Transparent Commodity trade has become more transparent in India because to online commodity trading. Price discovery is fair, and it is regulated by large-scale involvement. When there is such a large degree of engagement, it also aids in gauging the perception and outlook of commodity traders. 4. Possibility of High Returns When it comes to commodities trading, there's always the possibility that a trader will strike it rich. However, this is only achievable if a sound trading plan is in place. 5. Hedging Hedging is the practice of managing price risks in the futures market by taking an equal and opposite position. Certain factors in commodity trading, such as natural disasters, economic crises, or war, might cause commodity prices to rise. These commodities can be used as a risk hedge. 6. Anti-inflationary protection Commodity prices typically rise during periods of inflation. Investing in the right commodities will not only help you beat inflation but also help you make excellent profits. 7. Trading with a Smaller Margin Commodity trading allows you to trade with a reduced margin of 5% -10%. You can take bigger positions with less capital if you have a lower margin. 8. There will be no cut-offs Time decay is a constraint while trading Options. As the expiration date approaches, there is less time to cash in on the option financially. Time decay is not an issue in commodities futures because there is no expectation of a strike price at expiration. As we mentioned before, trading strangles requires thebest Indian trading platform and the lowest brokerage for intraday trading. As one of the best brokerage firms in the country, we have created a powerful trading platform that makes analysis easy for you. To know more about its features, please get in touch with us now.
Mar 14, 2022
At Zebu we spend a lot of time reading news and articles that cover a wide range of topics, including investment analysis, psychology, technology, etc. We have been sharing our favorite reads with clients under our weekly ‘Zeal to read’
***** The most contrarian thing of all is not to oppose the crowd but to think for yourself. — Peter Thiel
News you may use
After Covid Dip, TV Advertising Volumes Grow 22% In 2021: BARC
Airlines line up new flights as govt allows regular international opsAt $632bn, India’s forex kitty 5th highest globally
Cabinet approves formation of National Land
Monetisation Corp for sale of surplus govt land, buildings
Central bank digital currency has seen rolling out this year: Finance minister Nirmala Sitharaman
Central PSUs achieve 80% of FY22 capex target by Feb-end
Current account deficit could breach 3% mark for first time in a decade: ICRA report
Data released by the National Statistical Office (NSO) on Friday showed the index of industrial production (IIP) rose an annual 1. 3% in January, from an upwardly revised 0. 7% in December.
Economic growth at 7.8%, oil price rise a dampener: S&P Global Ratings
Equity MFs log Rs 19,705-cr net inflow in Feb amid market volatility
Established Residential Realtors' Topline To Grow 35% In FY22: Report
Exports of Agri, processed food up 23% in April-January
For the fifth month in a row, the GST collections crossed Rs 1.3 lakh crore mark.
Economic growth at 7.8%, oil price rise a dampener: S&P Global Ratings
Equity MFs log Rs 19,705-cr net inflow in Feb amid market volatility
Established Residential Realtors' Topline To Grow 35% In FY22: Report
Exports of Agri, processed food up 23% in April-January
For the fifth month in a row, the GST collections crossed Rs 1.3 lakh crore mark.
Views may be of use
43 Pieces of Advice From an Ancient Egyptian Vizier to His Son
Around the year 2350 BC, a man named Ptahhotep was vizier to the pharaoh of ancient Egypt. The vizier was the highest-ranking official in ancient Egyptian “government”, and usually the right-hand man of the pharaoh. Ptahhotep was therefore a successful man, entrusted by his king to bear a big part of the burden of running the country. Even almost 4500 years ago, Egyptian society was already sophisticated enough to have built the great pyramids of Giza. The government was busy. They were implementing large-scale architectural projects, they were administering the country’s judicial system, they were ensuring an adequate supply of food and water to its cities, and they were collecting taxes from Egypt’s citizens to keep the whole thing funded. It was a complex operation, and if the pharaoh appointed Ptahhotep to be the head of the organization, it meant that he was probably an individual who knew what to do and how to get it done.
A few basic questions
One way to revert to simple is to explicitly ask ourselves the most basic questions about how each of us thinks about investing. Each of us has an investment process that hopefully (a) gels with who we are, and (b) works over the long run. Revisiting tenets of that process can help clear the mind in murky times and strengthen conviction to act on the implications of that process.
Act. Make decisions. No amount of information can remove all uncertainty. Have confidence in your moves. Better to be approximately right than precisely wrong. Take the long view. Don’t panic under short-term transitory developments. Stick to your plan. Prevent emotion from overtaking reason. Market timing generally doesn’t work. Recognize the rhythm of events. Remember the value of common sense. No system works all of the time. History is a guide, not a template.
Mental time travel is a great decision-making tool — this is how to use it
That’s why an important element of imagination training is to fill your brain with what I call “clues to the future,” concrete examples of new ideas that might shape how your future turns out. When you have a hippocampus full of clues, your brain will have better data to draw on, and the scenes you construct will be way more interesting
First Principles: The Building Blocks of True Knowledge
Reasoning from first principles allows us to step outside of history and conventional wisdom and see what is possible. When you really understand the principles at work, you can decide if the existing methods make sense. Often they don’t. Reasoning by first principles is useful when you are (1) doing something for the first time, (2) dealing with complexity, and (3) trying to understand a situation that you’re having problems with. In all of these areas, your thinking gets better when you stop making assumptions and you stop letting others frame the problem for you.
Naval Ravikant: 21 Staggering Insights About Wealth and Happiness from a Global Thought Leader
Comparison is not only the thief of joy, but it’s also always a feature of multi-player games, where you’re competing against everyone else. An internal game, however, would be something like raising a child to be the best person they could be, completing a marathon by yourself, or building a business that you’re proud of.
10 Lessons I’ve Learned from 10 Years Pursuing Financial Independence
This driver for happiness is behind nearly everything we do. But figuring out what sort of life is going to be fulfilling and bring us purpose is a personal journey. The sooner you identify the key drivers of your happiness, the quicker you can start to plan out your ideal life. I know life sometimes feels really complicated and stressful but at the end of the day, we’re still just another animal on Earth whose needs and desires haven’t changed that much over the ~50,000 years we've been roaming around. In 1943 an American psychologist called Abraham Maslow published a paper called “A Theory of Human Motivation” which included the now very famous Maslow’s hierarchy of needs.
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Mar 13, 2022
The volume-weighted average price (VWAP) is a trading benchmark that shows the average price a security has traded at over the course of a day, depending on both volume and price. VWAP gives you the average pricing of a stock by accounting for one of the most important parameters - volume. How to Work Out the Average Volume-Weighted Price Instead of manually calculating the VWAP, you can simply add it as an indicator to your chart. When it comes to using the right indicators for your trading strategy, you need an online trading platform from one of the fastest-growing stock broker companies in India. Our goal is to give you the best online stock trading experience with every possible indicator that you might need to create your strategy. Getting back to calculating the VWAP - you can follow these steps to compute the VWAP on your own. Assume a 5-minute chart; regardless of the intraday time frame, the formula is the same. Find the stock's average price for the first five minutes of the trading day. Now, multiply the high, low, and close of a candlestick by three. Multiply by the volume of that time period. In a spreadsheet, enter the result in the price column. Divide this value from the volume for that time period. This will give you the VWAP. Continue to add the price value from each period to the previous values to maintain the VWAP value throughout the day. Subtract this amount from the total volume up to that point. Create columns for cumulative price value and cumulative volume in a spreadsheet to make this easier. What Does VWAP Have to Say to You? The VWAP ratio is used by large institutional purchasers and mutual funds to help them move into and out of companies with as little market impact as feasible. As a result, institutions will try to buy below the VWAP or sell above it whenever possible. As a result of their efforts, the price is pushed back toward the average rather than away from it. VWAP can also be thought of as a trend confirmation tool and you can build a trading strategy around it. They may prefer to open long bets when the price is above VWAP, for example. They may opt to start short positions when the price is below VWAP. Difference Between MA and a VWAP? VWAP and a moving average may appear similar on a chart. The calculations for these two indicators are different. VWAP is calculated by dividing the entire volume by the sum of price multiplied by volume. A simple moving average is calculated by adding closing prices over a set number of periods (say 10) and dividing by the number of periods (10). There is no consideration for volume. The Volume-Weighted Average Price's Limitations VWAP is a one-day indicator that is reset at the start of each trading day. When attempting to calculate an average VWAP over several days, the average may become distorted from the genuine VWAP reading, as explained above. When institutional buyers decide to buy or sell a stock, the VWAP is an important consideration for them. In strong uptrends, the price may continue to rise for several days without ever or only sometimes falling below the VWAP. Waiting for the price to fall below VWAP may therefore be a missed chance if prices are rapidly rising. VWAP is based on historical data and does not have any inherent prediction or calculation capabilities. Because VWAP is tied to the day's opening price range, the indicator's lag grows as the day progresses. This may be observed in how, after 330 minutes (the length of a normal trading session), a 1-minute period VWAP calculation can typically resemble a 390-minute moving average at the end of the trading day. Why Does The VWAP Matter? Traders who want to get a smoothed-out indication of a security's price over time utilise the VWAP. Larger traders that need to make sure their trades don't alter the price of the security they're seeking to purchase or sell use it as well. To prevent artificially inflating the price of an asset, a hedge fund might refrain from placing a buy order for a price higher than the security's VWAP. Similarly, it should avoid placing orders that are too low in comparison to the VWAP, so that the price is not driven down by the sale. When used right, VWAP can take your best online stock trading experience and enhance it. With the right online trading platform like Zebull Smart Trader that comes with VWAP and so many other in-built indicators, you can ensure that your strategy is designed to make the most profits. As one of the fastest-growing stock broker companies in the country, we are dedicated to providing you with the best tools for the best trades. Please get in touch with us to know more about our products and services.
Mar 10, 2022
When the government announced a lockdown in March 2020, the stock markets in India plummeted. However, thanks to investors adding a healthy dose of mid-cap stocks to their portfolio holdings, the markets recovered quickly and spectacularly. Mid-cap equities, unlike large-cap stocks, have a double-edged sword of stronger growth potential but higher risks. Before investing in them, an investor must first understand the company's fundamentals, as well as the present status of the markets and the macro-economy. Before you start investing, always consider going with one of the best brokerage firms in the country like Zebu. As a top broker in share market we have created one of the best stock trading platforms, for you to use and invest. Before you add more shares to your mid-cap portfolio, keep the following 10 things in mind: 1. Availability of liquid assets When it comes to mid-cap investing, liquidity is the most important factor. You must make sure that you can get out of the stock before it loses too much value. Stocks, where mutual funds or proprietary traders have purchased large quantities, should be avoided by retail investors. These stocks are vulnerable to a quick selloff and significant, surprise price loss. 2. Previous performance A steady track record of good performance over the last 4-5 years is an important indicator of a company's stability. A shaky track record, as well as a P&L statement rife with losses and declining sales, is a red flag. 3. Exposure to macroeconomic forces Examine the company's pressure areas before investing. When demand for automobiles falls, mid-cap stocks in auto-ancillaries suffer. Mid-cap metal equities are vulnerable to global oversupply and fluctuating raw material prices. To understand the dangers that your stocks face, look at the macro variables. 4. Mid-cap stocks' returns Mid-cap stocks should be viewed through a different lens than Nifty and Sensex stocks. Benchmark indexes should not be compared to mid-cap stocks in the first place. Mid-cap stocks come with greater rewards but also a greater risk. If you are able to identify under-valued mid-cap stocks, your portfolio's value will drastically increase. 5. Pay attention to mid-cap exposure. Find the total exposure you want to have to mid-cap companies based on your risk tolerance levels and keep to it. Let's say you decide to invest 30% of your portfolio in mid-cap equities, and you adhere to it. If you go over the limit, take profits and limit your exposure. 6. Examine the leadership and business governance Mid-cap companies have received a lot of bad press due to poor corporate governance and mismanagement. Make sure the companies you invest in have strong internal controls and a high level of corporate accountability. A well-oiled, well-managed corporation will have a strong management team. 7. Risks must be monitored before returns can be managed When it comes to mid-cap equities, the risk is measured in terms of volatility. Concentrate on stocks that have higher risk-adjusted returns. The investor can expect a good return if he handles the risk. Increasing risks in the pursuit of a high return, on the other hand, is equivalent to risking hard-earned money. 8. Stay away from stocks that have a lot of pledges. Rather than being enticed by large gains, retail investors should keep an eye out for stocks that have more than 50% promoter pledges. When the promoter fails to bring in additional margin and the lenders begin to dump the shares, these shares are extremely exposed to price fluctuations. 9. Be aware of regulatory circulars. The market regulator SEBI has had a significant impact on mid-cap equities in the past. Three SEBI circulars released in 2018 sparked a free-fall in mid-cap stocks. When buying in mid-cap stocks, investors should be aware of SEBI's regulars. 10. Bullish vs bearish time periods During optimistic periods, investors flood the market with liquidity, drowning out the company's fundamentals. Only during difficult times is a company's resilience truly tested. As one of the top brokers in share market, we have created the best stock trading platform for you to invest in wisely. Our tool is designed to help investors and traders like to analyse a company with a wide range of indicators and screeners as per your strategy. As one of the best brokerage firms in the country, we invite you to open a trading and investment account with us.
Mar 09, 2022
Although times have changed dramatically, women still do not enjoy a significant financial advantage at home. While the widespread notion is that women are unable to invest, women themselves are unsure about their financial capabilities. They are unquestionably better at saving, but they lack passion for investing due to a lack of knowledge. Every housewife, sister, mother, and daughter should try to learn about investment. Before you start investing, it is important that you do so with one of the best share brokers in the country. At Zebu, we have the lowest brokerage for investments and also support you with a highly advanced online trading platform to help you analyse stocks and execute your trades. In comparison to men, here are four reasons why they would make good investors. 1. More reliable return-givers Did you know that women's investment portfolios produce higher returns than men's? It's not just us that believe this; studies back us up. For example, according to a poll conducted by ET Money in March 2021, women investors achieved higher returns than males every year from 2017 to 2020. In fact, during the pandemic in 2020, they generated 14 percent of the returns, compared to only 11 percent for men. Even in the United States and the United Kingdom, women have outperformed men. According to Fidelity's 2021 Women and Investing Study, women's returns in the US were 40 basis points greater than men's between 2011 and 2020. 2. Investing skills that come naturally Behavioral and psychological characteristics can also play a role. Women are less risk-averse, trade less frequently, research more thoroughly, are more disciplined, and are less overconfident than their male counterparts. As a result, they tread carefully, investing more in mutual funds than stocks; they stay invested for the long term without frequent transactions and changes; and they are disciplined in their asset allocations, making no rash decisions or knee-jerk reactions. From 1991 to 1997, the University of California-Berkley looked at the common stock investments of approximately 35,000 households. Males traded 45 percent more frequently than women, yet women outperformed men by 0.94 percent per year, according to the study. 3. There's a better chance you'll make it to the finish line. Women invest with a long-term perspective as well as an outcome-based strategy. This means that, because they are focused on the financial goal rather than the excitement of investing, they invest in a way that allows them to meet their objectives within the time frame they have set. 4. Financial empowerment One of the most compelling reasons for women to begin investing is that it will enable them to become more active in and aware of their household's financial affairs. Women would not feel adrift owing to their ignorance or be compelled to rely on others for financial guidance in the event of the death or crippling sickness of their spouse, father, brother, son, or any other male figure they are dependent on. Financial literacy and awareness help her and her children secure their financial destinies without being deceived or in debt to others. Two of the most important checklists for first-time investors are the right online trading platform and the lowest brokerage for investments. As one of the best share brokers in the country, we at Zebu will give you all of this and more. To know more about our services and products, please get in touch with us now.
Mar 08, 2022
An expiry date usually refers to the last day when a product or service can be used. Expiry marks the conclusion of a contract or an asset in the market. When trading in the derivatives market, such as futures and options contracts, the expiry date refers to the contract's final date after which it will no longer be valid. When a derivatives contract reaches its expiration date, it has a variety of consequences for derivative traders as well as the Indian stock market as a whole. Before we get into the basics of expiry trading, it’s important to know that expiry day trading is extremely risky and it takes a certain level of experience before you can become profitable. However, if you would like to get started with options and futures analysis, you need access to the best trading platform from one of the best online share brokers in the country. At Zebu, we give you all of this and more - we also offer the lowest brokerage for intraday trading. The meaning of derivatives contracts Futures and options contracts on stocks, commodities, currencies, and other assets are examples of derivative contracts. Futures and options are similar in that they both convey a guarantee to buy or sell an asset at a certain price at a future date. But that's where the resemblance ends. You are not obligated to keep your pledge under an Options contract. You can simply choose to ignore the contract, and it will end on the agreed-upon date. A Futures contract, on the other hand, requires you to complete the deal by the expiration date. You must not allow the contract to lapse. This is what distinguishes futures from options. The Indian stock exchange has a predetermined standard expiry date for the F & O market to remove any confusion among traders. Every month on the last Thursday, we call it an expiry day. For example, if you buy a futures contract on January 14th, 2022, the contract will expire on January 27th, 2022, the last Thursday of the month. If the final Thursday of the month is a trading holiday, meaning the stock market is closed on that day, the previous day, i.e. the last Wednesday of the month, is the expiry date. Please note that Nifty and Bank Nifty indices have weekly expiries which happen every Thursday of the week. And stocks have a monthly expiry which is the last Thursday of the month. What happens during the expiry date? Here's what occurs when a derivatives contract reaches its expiration date in different sorts of contracts — Options Contracts You are not obligated to fulfil the contract in the case of options contracts. As a result, if the contract is not used before the expiration date, it will simply expire. The seller forfeits the premium you paid to purchase the option. You don’t have to pay any additional fees. Futures Contracts You would have to fulfil the deal on the expiration date if you were to use a futures contract. This happens in two ways. You can purchase a new contract to replace the existing futures contract. Assume you purchased a futures contract to purchase 1000 shares of XYZ Company. You can buy another futures contract to sell 1000 shares of XYZ firm on the expiration date. The first contract to sell the shares is nullified by this new contract, which will now be in your position. You would have to settle the price discrepancy, if any, in such cases. The price difference is due to the difference in the futures contract's price. Because stock prices fluctuate every day, the price of the futures contract fluctuates as well. As a result, the price of the futures contract you buy first may differ from the price of the futures contract you buy later. In such circumstances, you'll have to pay the price difference in order to complete your contract by the expiration date. The impact of the stock's expiration date on its price Due to the fact that the expiry date signifies the end of F&O contracts, there is a lot of volatility on the stock exchange as a whole. The stock market may turn bullish or bearish depending on the type of futures contracts settled on the expiry date. Arbitrage trading also has an impact on stock market prices towards the expiration date. Arbitrage trading is when F&O traders want to profit from the small price difference in the same security's contracts on different expiry dates. They might buy on the secondary market and sell on the F & O market, or the other way around. Price changes from this buying and selling have an impact on the stock market as a whole. However, this effect is just temporary, as the stock market corrects itself once the expiration date has passed. In Conclusion Know the expiry date of the derivative contracts you buy if you trade futures and options. The settlement of your contracts is determined by the expiry date, and you should be aware of what happens on that date. Also, as a stock trader, you should be aware of the impact of the expiry date on the overall stock market. Due to increased volatility around the expiry date, you can either book short-term profits or avoid trading altogether to reduce losses. As we mentioned before, this is the most basic introduction to what happens on an expiry day. In future articles, we will get into more details about a few popular expiry day strategies. For now, you just need to understand that to get started with futures and options analysis, you need the lowest brokerage for intraday trading as well as the best trading platform. As a leading online share broker, we at Zebu have created the perfect trading platform with an extensive amount of features to make trading simply for you.
Mar 03, 2022
For those who trade using technical analysis, technical indicators are the core of their trading. Whether you day trade or swing trade, these indicators are extremely important. Technical analysis' principal purpose is to forecast future price movement. Understanding the art of trading patterns and indicators will help you in understanding them better. Technical indicators are separated into two types: leading and lagging indicators. In this post, we'll look at both types of indicators to see which one best suits your trading style. But before we begin, let’s talk about access to indicators. When you start trading, it is important to have one of the best trading accounts from the best share broker in terms of the number of indicators you can use. Zebull Smart Trader is a high-end online trading platform that gives you the widest range of leading as well as lagging indicators for you to choose from. With us, you can execute any complex strategy with any number of indicators. What is a Leading Technical Indicator, and how does it work? Leading indicators are used to anticipate future price changes and provide a trading advantage to the trader. Leading indicators provide an early signal of entry or exit and show price momentum over a period of time that is utilised to calculate the indicator. The following are some well-known leading indicators: Stochastic Oscillator RSI Volume William % R Volume profile Because volume gives us the buying and selling pressures in the market, it tends to indicate changes even before the price moves. For example, when a market top is formed, you can clearly see an exhaustion of buyers. If that is followed by an increasing number of sellers, then you can assume that the trend has reversed. What is a Lagging Technical Indicator, and how does it work? Lagging indicators are price reversal indicators that follow a trend and predict price reversals. These are especially useful if you follow a trend following strategy. They don't predict future price changes; instead, they just notify us whether prices are rising or falling so that we can invest accordingly. Despite the delayed feedback, many traders prefer lagging indicators since they let them trade with greater confidence by confirming their results. Before buying a stock, traders usually employ two or more lagging indicators to confirm price movements. Examples of lagging indicators: Moving Averages Moving averages convergence and divergence Let's look at an example: A 50 period 200 period moving average is a typical example of a lagging indicator setup. When the 50 MA crosses below the 200 SMA, a security is said to be bearish. When the 50 MA crosses above the 200 SMA, a security is considered to be bullish. If you consider the first signal from the moving average crossover and execute your trades, they might end up in a loss. The key reason for this is that by the time the price moves lower and the SMAs respond, the price would have already dropped significantly and reversed. Similarly, when we receive a bullish crossover indication, it is better to wait for a pullback before entering a trade. What is the difference between the two types of indicators? Signal Generation Leading indicators provide trading signals when a trend is about to begin, whilst lagging indicators track price movements. Time Periods to Avoid Leading indicators attempt to predict price using a shorter timeframe and, as a result, trail price fluctuations. Lagging Indicators provide signals after a trend or reversal has occurred. They can be used to determine the direction of the trend. Drawbacks of leading and lagging indicators Leading indicators are prone to false signals because they react quickly to price changes. Lagging indicators take a long time to react and might also send out false signals. Using Leading and Lagging Technical Indicators in Combination Traders can use a combination of a leading and lagging indicator to create a better trading system. For example, you can use RSI and Moving average crossover. In this strategy, you can wait for a buy/sell signal from RSI (a leading indicator) and wait for a confirmation from the moving average crossover to initiate a trade. Combining leading and lagging indicators can be a simple but powerful way to trade. Creating a trading strategy is an art. You need the best trading accounts from the best share broker to give you access to all types of leading and lagging indicators. This is exactly what we offer at Zebu. We have created a highly advanced online trading platform that helps you take the best possible trades with a host of indicators. To know more about Zebull Smart Trader, please get in touch with us now.
Mar 02, 2022
Both strangles and straddles are options techniques that allow an investor to profit from big price changes in a company, whether the stock moves up or down. Both strategies involve purchasing an equal number of call and put options that expire on the same day. Option prices are intrinsically related to the price of something else, making them a sort of derivative security. You have the right, but not the responsibility, to buy or sell an underlying asset at a specified price on or before a specific date if you purchase an options contract. A call option allows the holder to purchase stock, whereas a put option allows the holder to sell shares. An option contract's strike price is the price at which an underlying stock can be purchased or sold. Before a position can be closed for a profit, the stock must rise above this price for calls and fall below this price for puts. Before we give you an explainer of the strangle and straddle, it is important to know that you need to analyse them for maximum profits. At Zebu, one of the fastest-growing brokerage firms in the country, we have created the best Indian trading platform with the lowest brokerage for intraday trading. If you would like to simplify your option trading game, we are here to help you out. Options Straddle A straddle trade is one technique for a trader to profit on an underlying asset's price change. Let's imagine a company's latest earnings are due in three weeks, and you have no idea whether the news will be positive or negative. Because the stock is expected to go dramatically higher or down when the results are published, the weeks leading up to the news release are an excellent opportunity to enter into a straddle. Let's pretend that the stock is trading at Rs 1000 in April. Assume the price of a Rs 1000 call option for June is Rs 20 and the price of a Rs 1000 put option for June is Rs 10. A straddle is created by buying both the call and the put options. If the lot size is 200, your total investment would be (20+10)*100 = Rs 3000. The straddle will gain value if the stock rises (because of the long call option) or falls (due to the short call option) (because of the long put option). Profits will be achieved as long as the stock price swings in either direction by more than Rs 30 per share. Profits will be achieved as long as the stock price swings in either direction by more than Rs 30 per share. Since ATM options are bought, this strategy is called a long straddle. Traders with large capitals often choose short straddles to make additional income. In short straddle, instead of buying the ATM call and put options, traders sell them. It is a directionally neutral strategy. Options Strangle The improvisation of the strangle over the straddle mostly helps in lowering the strategy cost. But, the number of points required to break even rises. The strangle requires the purchase of OTM call and put options. Remember that the OTM strike is usually cheaper than the ATM strike, therefore setting up a strangle is less expensive than setting up a straddle. For example, if the Nifty is currently trading at 7921, we'll need to buy OTM Call and Put options to put up a strangle. Keep in mind that both options must have the same expiration date and underlying. Assume you purchase OTM options with a 200-point spread. As a result, you would purchase the 7700 Put option and the 8100 Call option. These options are currently trading at a price of Rs 20 and 30, respectively. The total premium for executing the strangle is 50. Nifty must expire above 8100 or below 7700 to be profitable in this method. When you sell OTM options, then it is called a short strangle. It is a neutral strategy that is profitable if the underlying expires between the two strikes of the OTM options. While this is just an overview of the strangle and straddle, two of the most common options trading strategy, we will get into a detailed look at the strategies with respect to moneyness as well as option greeks in a later post. As we mentioned before, trading strangles and straddles requires the best Indian trading platform and the lowest brokerage for intraday trading. As one of the best brokerage firms in the country, we have created a powerful trading platform that makes option analysis easy for you. To know more about its features, please get in touch with us now.
Mar 01, 2022