Firstly, we must ask ourselves these 3 question
- Why do we need an options trading software.
- Secondly do we really need to pay for this software.
- Most Importantly, What are the features that we should look before making a purchase.
Let us address each of these questions one by one in detail.
Why do we need an options trading software?
There are many people claiming to have developed an options trading software. But there are very few that can actually be categorized as one. Let us understand the complexity of an option contract.
To answer this question firstly, we have to understand what is an option? Secondly, we have to see the importance of time in a derivative contract. Finally, what are derivatives? Last but not least Implied Volatility and what is its role in options trading?
What are Derivatives?
Answer – Derivatives are time-bound contracts with terms and conditions. Derivatives are derived from their base asset classes. For example, Equity is a type of asset and its derivatives are known as equity derivatives. The parent class has to be an asset. The hierarchy is shown below.
NOTE – Two terms and conditions of a derivative contract are Premium and Expiry
Asset > Equities> Equity Derivatives > Futures > Options
To know in greater depth about futures and options we also have a dedicated article which you can read here. What is F&O?
Expiry – It is a term related to futures and options which means the premium of the contracts on the day of expiry will become 0, signifying that all the contracts brought and sold will be settled on the day of expiry. The expiry day in India is set as Thursday.
- Weekly Expiry – All the weekly contracts will have an expiry on every thursday of the week.
- Monthly Expiry – All the monthly contract will have an expiry on the last thursday of the month.
Note – If Thursday a is trading holiday, then the contracts will expire on Wednesday. Condition number 2 – Thursday and Wednesday are both trading holidays then the contract will expire on Tuesday. Under no circumstances the contract will be carried out on Friday or Saturday.
Every Saturday and Sunday is a trading holiday in India. For more on basic terminologies of the derivative market watch this 2 minutes video on the terms of option contracts.
Types of Derivatives
- Futures – Expiry Monthly
- Options – Weekly as well as Monthly Expiry
- Call options – We buy a call option when market goes up – Expiry Weekly
- Put options – We buy a put option when market falls down – Expiry Weekly
Now, so far it’s super easy but things get tricky when I tell the readers that you can sell the options as well and buying a call is also equivalent to selling a put option.
Moreover, there are two categories of options and futures.
- Stock Future
- Stock Options
- Index Future
- Index Options
Additionally, there is the spot price, strike price and premiums that we must know before we dive into trading into options. All the while we will have to deal with this set of numbers throughout the day.
Options trading in Carryforward
The above information is useful only for intraday traders. If you wish to hold an option i.e carryforward an option we have an entirely new set of rules called the option greeks.
So how do we do trading in options? Well for starters we just do it, after our beginner’s luck starts waning and we start losing our capital. We become enlightened and start studying options.
Advanced traders do confusing things like buying and selling the same strikes but of different expiries by deploying a strategy. When we hold an option for a day it is known as carrying forward. Deployment of strategy is known as hedging.
Basically, we buy and simultaneously sell the option contracts of different strike prices based on our assumption of market trends. There is a very good channel on YouTube 🙂 by the name of Theta Gainers from where anyone can watch the videos and learn various types of Options Trading Hedging Strategies.
Finally, we arrive at a conclusion that yes options trading software is important to analyse this amount of mathematical complexity and data interpretation in a real-life scenario.
Do we have to pay for the software?
Most of the Demat accounts offer good option chain analysis within their application interface which is sufficient for intraday traders.
For holding options i.e carryforward we need to be very careful about the data we are analysing with option greeks and therefore we need software. Almost all of the software offers a free version for a limited period and a paid version after an interval. So there are no freebies and yes we have to pay sooner or later.
List of Options Trading Softwares in India
The list is very very long!! not really because we have only two strong players or rather only two players that are worthy of any mentions. The softwares that are available are either entire trading terminals or are a collection of useless tools. Other softwares are for forex trader only and so they don’t find their mention in this post.
OPSTRA vs SENSIBULL
You just need a google account or Facebook account to sign in for both OPSTRA and SENSIBULL and all will be taken care of.
|1||Pricing||3 Plans 640/mth max plan price||2 Plans 1000+GST/mth max price|
|2||Free Plan||Yes with limited access available||Yes with full acess is available|
|3||IV Charts availability||Paid version||Free|
|4||Design and Interface||Excellent||Dull and Old|
|5||Integration||Multiple Broker Available||Not Available in Opstra|
|5||Experts advise and Copy Trades||Yes||No|
|7||Option Strategy Builder||Yes||Yes|
|8||Ready-Made Strategy available||Yes||No|
|9||Difficulty and Complexity||Hard to use||Moderate to use|
|10||Stock data, FII Data, Multistrike data||Paid Plan||Open in Free version|
|11||Overall||Excellent||Everything that is available in the free version accepts the real-time update|
|12||Verdict||If you have a Zerodha or Angel Broking account go for it. Sensibull is an excellent platform.||If you want to explore whatever facility that a user or an analyst have in sensibull then it is basically freely available in Opstra.|
|13||Analogy||Sensibull is an IPhone of Options trading software||Opstra is Samsung. Both are equally strong and same in their functionality|