OPTIONS Trading is at the highest in Indian Market. What does that mean?

 

20^th October 2021

OPTIONS Trading is at the highest in Indian Market. What does that mean?

Dear Fellow Travelers,

Namaste! Our last two posts – one on Crypto predictions and other on 2022 market predictions made our readers happy. They got lot of idea for their trade planning. There is some important data is emerging from Indian Market.

The data: -

Average daily turnover in Indian cash segment was Rs.66000 Crs in September 2021 / Futures trading was Rs. 85353 Crs and Options trading was Rs.63.07 lakh Crs per day in Indian Market.

In the last October – cash trading to options trading was 5 times more. Today it is 10 times more.

It means traders are happy trading in options compared to the actual shares of the company. The ratio is mind blowing.

There are 10 shares traded in Options when 1 share is traded in Cash segments.

These are the NEW TRADERS and VERY YOUNG TRADERS. They are using TECHNOLOGY PLATFORMS which provides them with the ALGO trading technology FREE of cost and they are using it.

Young Minds and Love for OPTIONS: -

Have you seen a recent trend – young boys and girls wants to enjoy the relationships without any commitments. There is lot of resistance to the marriage and any kind of commitments.

There is increase in contractual jobs rather than permanent jobs. They call it GIG jobs.

There is demand for rental or share apartments rather then owned apartments from the new comers.

There is demand for artificial jewellery compared to real jewellery. So, if they lost it – they have nothing to worry.

The overall mindset is to AVOID any kinds of PAIN. There is a belief that if there is no PAIN – life will be full of happiness.

For them Options are the easiest way to invest without any commitments. Options allows them to trade big with lower out go. The profits are big and losses are small. This apparent logic is the root cause of love for options.

Smart Traders V/s. New Traders: -

90% of the traders who are trading big in Options are the new entrants in the market. They have not seen the major mandi in the market so far. They have only seen the one side TEJI in the last 18 months. They are in a kind of Honeymoon period with respect to the market. They use the Options as a NAKED TRADING style. Due to this their profits are huge when they go right. Since they are earning in tons – they assume that this will go on for ever.

The smartest of the smart guys also uses the options. They use them along with the portfolio to hedge their portfolio downside or return downside. So, they are more balanced and stable when it comes to options trading.

What did Buffett say about this?

Buffett calls – “Options and Futures are the weapons of Mass Destruction of Wealth.”

I have seen many people coming on the street due to losses in the above. I have seen many novices forced to sell their house due to play in Options and Futures.

My experience says – when you stop somebody with your FREE ADVICE – they assume – we don’t understand the stock market or we are jealous of their profit. If you are also thinking like this – May God Bless you.

What Next?

There are simple ways of making money. But there are NO EASY WAYS to make money. If you want to explore the SIMPLE ways – do approach us.

Have a GREAT INVESTING.

Follow me on Twitter @hiteshmparikh or on Whatsapp - +91-9869425399.

 

Live With Passion…Invest With Passion.

 

 

Hitesh Parikh.