Option Selling: 15 top questions answered

By Rohit Malik

May 3, 2022

A collection of top questions and answers related to Option Selling in the Indian stock market.

How much money do you need to sell options in India?

Normally, you will need around ₹ 1,00,000 to sell one lot of Nifty options. But if you buy a far away option before selling then the margin requirement is reduced to nearly ₹ 25,000 per lot.

Is Option Selling profitable in India?

Yes, done correctly option selling is one of the most profitable trading strategies in India (and elsewhere with similar market conditions).

What is the best time of day to sell options?

As noted by many profitable traders – the best time of the day to sell options is 9:25-10 AM IST. This is for the Indian Stock Market which opens at 9:15 AM for retail traders.

Who makes more money: Option buyer or seller?

An option buyer has less winning rate but he earns more money per trade ( as a return on money invested for the trade).

Which Option Strategy is Most Profitable?

Selling out of the money call and put options is the most profitable options strategy. In a range-bound market, this strategy requires little to no adjustment while giving returns of near ~40%.

What is Safest Option Strategy?

Statistically, Covered calls are the safest option trading strategy. You buy the stock and sell little out of the money calls of the same stock.

Why Option Selling is costly?

Option Seller is taking the risk of obligation to sell the underlying instrument (index or stock) at the strike price. This means he is collecting the limited premium and has unlimited risk potential. That’s why the margin requirement for Option Selling is quite high as compared to Option buying.

Why Option Selling is best?

Option Selling is best because the probability is very high for an Option to expire at zero value.
An option buyer can make money only when momentum is in favor of the Option Buyer (1 in 3 market conditions). Whereas the Option seller will make money in two out of three conditions.

option selling profitable
image – zerodha varsity

About the author

Rohit Malik

A yogi who like Finance and Technology. I have been in Indian Stock market for over 12 years now as financial analyst, portfolio manager, trader. Now, I focus on Yoga, Financial Education & Long term investing. 

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