InvestorQ : What is a better bet to buy; index options or stock options?
sara Kunju made post

What is a better bet to buy; index options or stock options?

Answer
image
3 years ago
Follow

There really cannot be a clear answer to that. It will depend on whether you are looking to leverage on the specific stock, specific industry group, particular theme or the market as a whole. There is a very subtle distinction you need to make. When do you buy a stock option and when do you buy an index options. If you are positive on private banking, you are better off buying a call option on the Bank Nifty. Similarly, if you are positive on India macros, you can buy call options on the Nifty. But if you see some specific price benefit for SBI, then it makes sense to buy a stock option. Knowing this difference is the key to making money in call options. Index options are very liquid; for example, Bank Nifty and Nifty options are among the most liquid contracts and you can find sufficient volumes on most strikes. That may not be the case with most stocks barring the top 20 most liquid stocks.

0 Views