How To Do Options Trading In Zerodha

Zerodha is an excellent platform for Options Trading, and if you have chosen Zerodha, you are certainly on the right platform. However, before you start trading Options on Zerodha, you must get yourself thoroughly familiar with Option trading in Zerodha since even a slight mistake can cost you a lot of money in Options Trading. In this post, I will explain everything that you need to know to trade Options in Zerodha.

What is Options Trading?

Options Trading is buying and selling contracts of an underlying asset, which can be an index, an equity, or an ETF. While selling Options contacts needs high capital, you can start Options buying with capital as low as ₹5000. However, you can choose if you would like to be an Option buyer or an Option seller. The current price at which the underlying asset is called the spot price. Contacts are available for various strike prices, close or far from the spot price.

The contracts' premium or price varies from strike price to strike price. Trading in Index Options like Nifty50 and Bank Nifty is pretty popular in India. Further, Options are flexible, and you can trade them in various ways. 

Zerodha Overview

Zerodha-review

Zerodha entered the industry in 2010 as a discount broker, allowing its customers to trade and invest in stocks, derivatives, and mutual funds. The SEBI-registered platform comes with an exceptionally clean and intuitive platform. The platform has been very reliable and comes with excellent trading applications and customer support.

Zerodha Charges: Account Opening and Brokerage

You can Open a Zerodha account for ₹200, and it will take an additional ₹100 if you want to activate the Commodity segment as well. Besides, Zerodha charges ₹300 per year for Annual Demat Maintenance.

Zerodha fee and charges

Zerodha follows a discount broking model and keeps the brokerage charges minimal. Here are the Zerodha brokerage charges:

  • ₹0 brokerage charges on Equity Delivery and Direct Mutual Fund
  • ₹20 or 0.03% (whichever is lower per executed order) on Equity Intraday, and F&O

How to Open a Zerodha Account?

Opening a Zerodha Account is pretty simple, and the process is entirely paperless. Here are the essential steps that you need to follow:

  • To begin, you can head over to the Zerodha official website and enter your Aadhar-linked mobile number 
  • After that, you need to complete your mobile OTP verification
  • Next, you will need to register an Email ID for Zerodha and complete your Email Account verification
  • Once you complete your Email verification, you will need to enter your Aadhaar and PAN details
  • Next, you will need to pay the Zerodha account opening charges through UPI or Netbanking
  • After that, you will have to complete your KYC, and after you proceed, you will be taken to the DigiLocker website to verify your Aadhaar
  • You will also have to specify some personal details like Marital status, Income slab, etc
  • Next, you will need to link your Bank account to your Zerodha account
  • In the next step, you will need to proceed to the webcam verification process and complete it 
  • The platform also requires you to upload documents, which include a copy of your PAN, your six months' bank statement as income proof (for F&O and Commodity segments), and an image of your signature
  • In the final step, you must eSign your document at the NSDL website, and over there, you will need to enter your Aadhaar card number and complete the OTP verification

What Makes Zerodha a Good Platform for Options Trading?

There are several reasons why Zerodha continues to be the best trading platform in India. I will walk you through the reasons one by one to provide you with essential clarity.

Clean & Intuitive Interface

Zerodha comes with a super clean and intuitive interface with balanced-out features. Unlike other trading platforms, Zerodha's interface is not cluttered with exaggerated features, and the platform instead focuses on providing traders with just what they need the most. Even a newbie should get the hang of the platform in a few minutes. The dashboard gives a nice view of your watchlist and fund. Besides, depositing and withdrawing funds is also effortless with Zerodha. 

When you place an order, managing your position in Zerodha is easy. The Order tab gives you a view of all the orders you place during the current trading session, while the Position tab lets you track your profits and loss for your current trade and past trades during the current session. 

Quick Order Placement

Timing plays a crucial role in Options trading, and a delay in order placement can impact your Stop Loss management in a negative way. However, order placement is exceptionally quick in Zerodha. All it takes is to specify the quantity and swipe the Buy button.

Fast Order Execution

Order execution is one of the most important aspects to consider when choosing a trading platform for Options Trading. You don't want a laggy platform with delays in order execution. If that happens, the consequences can be terrible for a trader, and your winning trade may turn into a losing trade. Zerodha has been able to offer a super fast interface since day 1, and that's the reason that most Options traders in India rely upon Zerodha.

Excellent Charting Tools

Zerodha gives you the option to choose between Tradingview and ChartIQ charting tools for your technical analysis. Besides, these charts come with over 100 technical indicators to help you with more accuracy. Further, you can capitalize on multiple timeframes and drawing tools on both Tradingview and ChartIQ.

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Sensibull Integration

Backtesting is an essential part of trading, and every disciplined trader needs to spend a lot of time backtesting strategies before implementing them for trading with real money. With Zerodha's Sensibull integration, traders can backtest their strategies in real time without having to put their hard-earned money in line. Besides, Sensibull has many excellent tools, including Options charts, to build better strategies and test them. 

sensibull

Advanced Order Types

Zerodha comes with many advanced order types, including Bracket Order, Cover Order, and GTT order. GTT order can be very effective for Options Traders since you can place a Stop Loss and Target at the same time while placing your Buy order. It can largely help you with your risk: reward, and money management. Once you place a GTT order, you certainly have nothing to worry about.

Killswitch to Beat Overtrading

There are often times when the market gets you frustrated, forcing you to place order after order. It happens mostly to beginners; the market can even wipe out your entire capital on such a day. This is where Zerodha's Killswitch comes into play. After you have placed the maximum number of daily trades you planned for yourself, you can enable the Killswitch. Once you enable the Killswitch, you will not be allowed to trade until the next morning, no matter how desperate the market gets you. Isn't that a great way to keep your capital intact?

zerodha-killswitch

Reliable Customer Care

Running into technical issues is quite normal in Options trading, but when you do, it's always advisable to break out of it as quickly as possible. This is where a good customer support team comes into play. Zerodha offers excellent customer support through phone and tickets. The response is pretty fast. However, when you contact Zerodha customer support, you must have your support code with you since they will need it. Besides, the platform has excellent FAQs for quick reference.

How To Do Options Trading In Zerodha?

Trading Options in Zerodha is ridiculously simple, and to trade Options, you must first decide if you want to trade Index Options or Equity Options. Besides, there are ETF Options and Currency and Commodity Options as well. However, Nifty50 and Bank Nifty Options are the most popular in India. To illustrate how to trade Options in Zerodha, I will explain it in terms of Bank Nifty Options. Since Bank Nifty is the underlying asset, you will add Bank Nifty to the watchlist first, and besides, do all the technical analysis on its chart (Spot chart). The size of one lot of Bank Nifty is 25 shares, and you can't buy quantities any less than this.

zerodha Kite

Next, you will need to analyze your technical chart well. For this, you can simply hover over Bank Nifty that you added to your watchlist. On hover, you will get an option to open its chart, and you can analyze the chart. Next, you can plan an entry based on your technical setup. If you think the price of Bank Nifty will decline, you can consider buying an ATM Put (PE) or selling an ATM Call (CE) and vice versa. One thing to bear in mind is that Options selling requires high capital. 

As far as strategies go, you can trade Options in many ways. Some commonly used ways are one-legged directional or two-legged strategies like straddling or strangling. While in a one-legged strategy, you have to determine the direction of the price accurately and, based on that, enter a trading position, a two-legged options strategy requires you to buy a CE or PE of the same strike price or varying price. Besides, you can also combine selling and buying to hedge your position. With hedging, you will still make some profit or at least avoid losses even when the price moves in an unexpected direction. However, two-legged strategies don't work when the market is sideways. 

How to place an Order in Zerodha?

To place an order in Zerodha, you have to search for the strike price for which you want to get a Cal or a Put. It's always advisable to choose an ATM strike price. After you find the contract, you have to add it to your watchlist. Next, you can hover over the contract and click the Buy button. After the Buy Window opens up, you can specify your order quantity. The quantity is 25 by default, but you can set it to higher numbers like this: 50 shares for two lots, 75 for three lots, and so on. Besides, you will have to specify your order types, which can be Intraday or Overnight.

Zerodha Order Place

If you want to place orders and square them off within the same day, you can select Intraday. However, if you want to carry your positions to the next day or the expiry day, you must select Overnight. Further, you can buy a contract at its current market price or set a limit price. Once you finish these essential settings, you can hit the Buy button again. You can track your order from the Order panel and track your profit and loss from the Position tab. 

Conclusion

Zerodha is currently India's finest and most reliable Online Platform for Options trading. The platform has been very focused on making things easier for traders since its inception, and Options traders will surely find a lot of help from the platform. Zerodha offers super-fast order execution and works equally well on all devices. Besides, the platform has never had any major technical glitches, which makes it a very reliable trading platform. Further, Zerodha has one of the best Customer Support teams in the industry to assist its users quickly with their technical issues.

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