SAMCO's Nilesh Sharma Explains How to Access Options Greeks and Integrated Options Chains for Free
08.02.2024 - 07:37:33
Business Wire IndiaOptions trading is a tricky and challenging segment of the financial markets in India. Their inherent complexity of options means that F&O traders need to grasp sophisticated financial concepts and jargon. Market volatility also comes into play, making it difficult to predict movements and manage risk effectively. Furthermore, the issue of liquidity in some options contracts can make it tricky to execute trades without impacting the market price. Together, these aspects make options trading a complex practice.
Despite this, retail traders across the country are increasingly gravitating towards this market segment. The F&O trading volumes in FY24 surpassed those of the previous financial year in just seven months. More specifically, weekly options have become a particular favourite among individual traders.
This growing participation, however, is not offset by a corresponding increase in performance. The Securities and Exchange Board of India (SEBI) conducted a study, which found that 90% or 9 in 10 traders in the F&O segment in India suffered losses in FY22. The average loss is also staggeringly high — coming in at Rs. 1.1 lakh.
Nilesh Sharma, Executive Director & President of SAMCO Securities, shares his incisive insights on why so few F&O traders see success in the markets.
“A major reason for the high losses among F&O traders is their overreliance on tips and suggestions, which lack any kind of solid foundation in the fundamental principles of how the market operates. This approach leads to poorly informed decisions and, frequently, to considerable financial loss. Additionally, many traders have a tendency to engage in excessive trading, which amplifies the risk of negative outcomes.
Above all, there's an even bigger problem at play — the absence of essential analytical tools. Specifically, access to ‘options Greeks’ is crucial for implementing effective trading strategies. These metrics provide insights into how options are likely to perform under varying market conditions. Unfortunately, such tools are often either unavailable on many trading platforms, or they are offered at a cost that is prohibitive for the average retail trader.”
Taking cognisance of this prevailing issue, SAMCO Securities has integrated options Greeks into the SAMCO trading app, so F&O traders can access them in real-time at their fingertips. The most remarkable aspect of this feature is that it’s available for free on the SAMCO trading platform. In a market where these tools are either unavailable or only offered at a steep premium, SAMCO is breaking new ground and bridging the gap that prevents F&O traders from experiencing trading success in the markets, with end-to-end analytical tools and features like options Greeks, options chains, margin calculator and the SAMCO brokerage calculator.
The Importance of Options Greeks for Options Traders
Options Greeks are crucial for options traders due to various compelling reasons. Fundamentally, they help traders assess how an option’s price reacts to changes in the price of the underlying asset, the implied volatility and the time left to expiry. Before planning and executing any options trading strategy, traders need to factor in the Greeks to assess how an option’s price may change during the period their position remains open.
More specifically, here’s how each of the four options Greeks — namely delta, gamma, theta and vega — influence an option trader’s position in the markets.
The delta measures how much the price of an option is expected to change for every unit of movement in the underlying asset’s price. It evaluates an option's sensitivity to the underlying asset’s price movement. For traders, the delta is important because it helps them understand their position's directional risk.
For instance, if an options contract has a delta of negative 0.20, it means the option's price might likely fall by Rs. 0.20 for every Re. 1 increase in the underlying asset’s price. Traders can use the delta to hedge their portfolios or take directional bets on the underlying asset
The gamma is closely associated with the delta of an options contract. It measures the rate of change of delta for every unit of movement in the underlying asset’s price. This effectively helps traders gauge how stable or unstable the delta of an options contract is.
High gamma values indicate that the delta can change rapidly. This is particularly relevant for traders who manage delta-neutral portfolios as they need to adjust their positions frequently to maintain delta neutrality. The gamma also helps traders manage the risks associated with sudden price movements.
Every option’s worth consists of two components — an intrinsic value and a time value. The intrinsic value remains unchanged, but the time value varies based on how close or far the expiry is. The theta, which represents the time decay of an option's price, quantifies how much value an option loses as it approaches expiry.
This is important because all options lose value over time. So, traders need to be mindful of theta to avoid holding options that might expire worthless. It's especially crucial for options sellers because time decay works in their favour.
The vega is an option Greek that measures an option's sensitivity to changes in the implied volatility of the underlying asset. A high vega typically indicates that the option's price is more sensitive to changes in the implied volatility. This is important because the IV is a major factor that affects an option's price.
Traders can rely on the vega to understand how much the price of an option might swing with changes in the implied volatility. For those trading in volatile markets, the key to adjusting their strategies according to expected market swings lies in managing the vega.
Beyond Options Greeks: Integrated Options Chains
An options chain is a table listing all available options contracts for a particular security. It shows various data points such as the strike price, expiration date, and type of options (whether they are calls or puts). It also displays current options price values — including the bid, ask, and last traded price.
For an options trader, an options chain offers a clear and comprehensive view of all the trading options available. This tool is practically very important because it allows traders to quickly assess and compare the potential profitability and risks of different positions. Traders can identify opportunities by simply looking at the differences in prices, volatility, and time decay across various strike prices and expiration dates.
Speaking of the importance of integrating the options chain with options Greeks to improve F&O trading performance and success, SAMCO’s Nilesh Sharma explains,
“For options traders, the real edge comes from using options Greeks and options chains together. They're both critical for making informed decisions. But here's the catch — most trading platforms split these tools apart. So, traders are left to switch between apps and platforms. Meanwhile, the market does not wait. It moves, prices change, and traders find themselves playing catch up.
means traders don't lose precious seconds switching back and forth. They've got everything they need in one place, which is crucial for staying ahead in a market that waits for no one.”
By making essential options tools available to traders across the country, SAMCO Securities is steadily democratising F&O trading and empowering options traders to take advantage of opportunities the moment they arise. Additionally, SAMCO also offers a wide range of other tools and solutions like the options fair value calculator, margin calculator and the SAMCO brokerage calculator to help traders make well-informed decisions.
About SAMCO Securities
SAMCO Securities was incorporated by Mr. Jimeet Modi, Founder & CEO of SAMCO Group in 2015. As the country’s leading wealth-tech platform, SAMCO Securities provides retail investors access to sophisticated financial technology and makes their wealth-creation journey simple, informed, and cost-effective. SAMCO Securities mission is to eliminate the existing challenges faced by traders and investors and democratise access to wealth management process for every Indian. With customer centricity at SAMCO’s core, we implement a quantitative approach to provide differentiated solutions that empower our customers in acing the capital markets.
Despite this, retail traders across the country are increasingly gravitating towards this market segment. The F&O trading volumes in FY24 surpassed those of the previous financial year in just seven months. More specifically, weekly options have become a particular favourite among individual traders.
This growing participation, however, is not offset by a corresponding increase in performance. The Securities and Exchange Board of India (SEBI) conducted a study, which found that 90% or 9 in 10 traders in the F&O segment in India suffered losses in FY22. The average loss is also staggeringly high — coming in at Rs. 1.1 lakh.
Nilesh Sharma, Executive Director & President of SAMCO Securities, shares his incisive insights on why so few F&O traders see success in the markets.
“A major reason for the high losses among F&O traders is their overreliance on tips and suggestions, which lack any kind of solid foundation in the fundamental principles of how the market operates. This approach leads to poorly informed decisions and, frequently, to considerable financial loss. Additionally, many traders have a tendency to engage in excessive trading, which amplifies the risk of negative outcomes.
Above all, there's an even bigger problem at play — the absence of essential analytical tools. Specifically, access to ‘options Greeks’ is crucial for implementing effective trading strategies. These metrics provide insights into how options are likely to perform under varying market conditions. Unfortunately, such tools are often either unavailable on many trading platforms, or they are offered at a cost that is prohibitive for the average retail trader.”
Taking cognisance of this prevailing issue, SAMCO Securities has integrated options Greeks into the SAMCO trading app, so F&O traders can access them in real-time at their fingertips. The most remarkable aspect of this feature is that it’s available for free on the SAMCO trading platform. In a market where these tools are either unavailable or only offered at a steep premium, SAMCO is breaking new ground and bridging the gap that prevents F&O traders from experiencing trading success in the markets, with end-to-end analytical tools and features like options Greeks, options chains, margin calculator and the SAMCO brokerage calculator.
The Importance of Options Greeks for Options Traders
Options Greeks are crucial for options traders due to various compelling reasons. Fundamentally, they help traders assess how an option’s price reacts to changes in the price of the underlying asset, the implied volatility and the time left to expiry. Before planning and executing any options trading strategy, traders need to factor in the Greeks to assess how an option’s price may change during the period their position remains open.
More specifically, here’s how each of the four options Greeks — namely delta, gamma, theta and vega — influence an option trader’s position in the markets.
- Delta
The delta measures how much the price of an option is expected to change for every unit of movement in the underlying asset’s price. It evaluates an option's sensitivity to the underlying asset’s price movement. For traders, the delta is important because it helps them understand their position's directional risk.
For instance, if an options contract has a delta of negative 0.20, it means the option's price might likely fall by Rs. 0.20 for every Re. 1 increase in the underlying asset’s price. Traders can use the delta to hedge their portfolios or take directional bets on the underlying asset
- Gamma
The gamma is closely associated with the delta of an options contract. It measures the rate of change of delta for every unit of movement in the underlying asset’s price. This effectively helps traders gauge how stable or unstable the delta of an options contract is.
High gamma values indicate that the delta can change rapidly. This is particularly relevant for traders who manage delta-neutral portfolios as they need to adjust their positions frequently to maintain delta neutrality. The gamma also helps traders manage the risks associated with sudden price movements.
- Theta
Every option’s worth consists of two components — an intrinsic value and a time value. The intrinsic value remains unchanged, but the time value varies based on how close or far the expiry is. The theta, which represents the time decay of an option's price, quantifies how much value an option loses as it approaches expiry.
This is important because all options lose value over time. So, traders need to be mindful of theta to avoid holding options that might expire worthless. It's especially crucial for options sellers because time decay works in their favour.
- Vega
The vega is an option Greek that measures an option's sensitivity to changes in the implied volatility of the underlying asset. A high vega typically indicates that the option's price is more sensitive to changes in the implied volatility. This is important because the IV is a major factor that affects an option's price.
Traders can rely on the vega to understand how much the price of an option might swing with changes in the implied volatility. For those trading in volatile markets, the key to adjusting their strategies according to expected market swings lies in managing the vega.
Beyond Options Greeks: Integrated Options Chains
An options chain is a table listing all available options contracts for a particular security. It shows various data points such as the strike price, expiration date, and type of options (whether they are calls or puts). It also displays current options price values — including the bid, ask, and last traded price.
For an options trader, an options chain offers a clear and comprehensive view of all the trading options available. This tool is practically very important because it allows traders to quickly assess and compare the potential profitability and risks of different positions. Traders can identify opportunities by simply looking at the differences in prices, volatility, and time decay across various strike prices and expiration dates.
Speaking of the importance of integrating the options chain with options Greeks to improve F&O trading performance and success, SAMCO’s Nilesh Sharma explains,
“For options traders, the real edge comes from using options Greeks and options chains together. They're both critical for making informed decisions. But here's the catch — most trading platforms split these tools apart. So, traders are left to switch between apps and platforms. Meanwhile, the market does not wait. It moves, prices change, and traders find themselves playing catch up.
means traders don't lose precious seconds switching back and forth. They've got everything they need in one place, which is crucial for staying ahead in a market that waits for no one.”
By making essential options tools available to traders across the country, SAMCO Securities is steadily democratising F&O trading and empowering options traders to take advantage of opportunities the moment they arise. Additionally, SAMCO also offers a wide range of other tools and solutions like the options fair value calculator, margin calculator and the SAMCO brokerage calculator to help traders make well-informed decisions.
About SAMCO Securities
SAMCO Securities was incorporated by Mr. Jimeet Modi, Founder & CEO of SAMCO Group in 2015. As the country’s leading wealth-tech platform, SAMCO Securities provides retail investors access to sophisticated financial technology and makes their wealth-creation journey simple, informed, and cost-effective. SAMCO Securities mission is to eliminate the existing challenges faced by traders and investors and democratise access to wealth management process for every Indian. With customer centricity at SAMCO’s core, we implement a quantitative approach to provide differentiated solutions that empower our customers in acing the capital markets.
