---
title: "F&O Questions Answered, One Page Each | RupeeCase Learn"
description: "130 F&O questions Indian traders ask, answered: option chain, India VIX, Greeks, OI, PCR, max pain, lot size, expiry day and tax. Short answers, dated charts."
source_url: "https://www.rupeecase.com/learn/questions/"
---

All**A**Getting started**B**Option chain and market data**C**Greeks**D**Volatility**E**Strategies and spreads**F**Hedging**G**Arbitrage**H**Dealer positioning and flows**I**Quant and relative value**J**Algo trading**K**Backtesting and research**L**Tax**!**Trap checks

130 questions, 130 answered

## AGetting started, rules and costs
18 questions, 18 answered.

1. [A01What are futures and options (F&O kya hai)?A future is an exchange contract to buy or sell an index at a fixed price on a set expiry date, and both sides carry the full move.Beginner](/learn/questions/what-are-futures-and-options)
2. [A02Option buying or option selling: which is better?Buying and selling the same option are mirror payoffs, so the choice is about the shape of the payoff and the costs, not about which side is smarter.Beginner, Trap check](/learn/questions/option-buying-vs-selling)
3. [A03How much capital do I need to trade or sell options?A buyer pays the full premium up front, so the most that can be lost is that premium.Beginner, Trap check](/learn/questions/capital-needed-for-options)
4. [A04What happens if my option expires in the money or out of the money?An option that expires out of the money has no value and lapses, so a buyer loses the premium and a seller keeps it.Beginner](/learn/questions/option-expires-itm-or-otm)
5. [A05What happens on expiry day?On expiry day an index contract stops trading and is settled in cash, so an in the money option pays its intrinsic value and an out of the money one lapses at zero.Beginner](/learn/questions/what-happens-on-expiry-day)
6. [A06What is the Nifty lot size now, and why did it change?The Nifty lot is 65 units, and NSE's lot size file shows 65 for every expiry month it lists, including the long dated ones.Beginner](/learn/questions/nifty-lot-size)
7. [A07Why is my option premium not rising even though Nifty went up?An option premium moves with the index through delta, and it also loses value as time passes and moves with implied volatility, so a rise in Nifty can leave the premium flat or lower when volatility falls or time runs out.Beginner](/learn/questions/why-premium-not-rising)
8. [A08How is an option price calculated?An option's price is the discounted expected payoff at expiry, worked out from the futures price, the strike, the time left, the implied volatility and the interest rate.Intermediate](/learn/questions/how-option-price-is-calculated)
9. [A09ITM, ATM, OTM: what is intrinsic value and what is time value?An option with intrinsic value is in the money: it would pay something if it expired at that close.Beginner](/learn/questions/itm-atm-otm-explained)
10. [A10Futures or options: which suits a beginner?Neither product is easier by its name: a future gains and loses point for point with no floor, while an option loss stops at the premium and its value decays with time.Beginner](/learn/questions/futures-or-options-for-beginners)
11. [A11Can an option buyer lose more than the premium, and can I hold options to expiry?An option buyer cannot lose more than the premium paid plus charges, because the buyer holds a right and can let it lapse, while a seller carries an obligation with no such cap.Beginner](/learn/questions/can-option-buyer-lose-more)
12. [A12How do people set a stop loss on options, and when do they exit?A stop loss on an option is an order that goes live once the price you set trades, so it is not a fixed cap on the loss.Beginner, Trap check](/learn/questions/stop-loss-on-options)
13. [A13What are SEBI's F&O rules on lot size, weekly expiry and upfront premium?SEBI's circular of 1 Oct 2024 set six measures, among them one weekly expiry per exchange and a higher minimum contract value for new index lots, both from 20 Nov 2024, and upfront collection of the option premium from buyers, from 1 Feb 2025.Beginner](/learn/questions/sebi-fo-rules)
14. [A14Why is Nifty expiry on Tuesday and Sensex on Thursday, and why no Bank Nifty weekly?From contracts expiring on 1 Sep 2025, NSE's NIFTY weekly expires on Tuesday and BSE's SENSEX weekly on Thursday: SEBI lets each exchange pick Tuesday or Thursday, and the two exchanges swapped the days they had.Beginner](/learn/questions/expiry-days-nifty-sensex)
15. [A15Why do 9 out of 10 F&O traders lose money?Most individual F&O traders lose money because the losses sit mostly in options, most traders are options buyers, and costs come out of every trade whether it wins or loses.Beginner](/learn/questions/why-fo-traders-lose)
16. [A16How much margin does selling a Nifty option need, and why more on expiry day?Margin for a sold Nifty option comes from the exchange risk model, which tests the position against price and volatility moves and adds an extreme loss margin, so there is no single amount for every day.Intermediate](/learn/questions/margin-to-sell-nifty-option)
17. [A17What is physical settlement in stock F&O?Since the October 2019 expiry, a stock option that is in the money at expiry, or a stock future still open at expiry, settles by delivery of shares rather than a cash difference.Intermediate](/learn/questions/physical-settlement-stock-fo)
18. [A18What is STT on options and on exercise?From 1 Apr 2026 the STT on an option sale is 0.15% of premium, paid by the seller, and the same 0.15% applies on exercise to the intrinsic value, paid by the buyer.Beginner](/learn/questions/stt-on-options)

## BOption chain and market data
12 questions, 12 answered.

1. [B01How do I read an option chain?An option chain is one table for one expiry: each row is a strike, calls sit on the left, puts on the right, and each side shows open interest, change in open interest, volume and the settle price.Beginner](/learn/questions/how-to-read-option-chain)
2. [B02What should I look at in option chain analysis for intraday?The chain the school uses is a closing snapshot, so its open interest and change in open interest are close to close figures and say nothing about what happened inside the session.Intermediate, Trap check](/learn/questions/option-chain-analysis-intraday)
3. [B03Is the highest call OI strike resistance and the highest put OI strike support?The largest call OI strike is not by itself a ceiling and the largest put OI strike is not by itself a floor, because open interest counts open contracts and not the reasons for holding them.Intermediate, Trap check](/learn/questions/highest-oi-support-resistance)
4. [B04What is PCR and how do I read it?The put call ratio divides put open interest by call open interest across the strikes you choose, so a ratio above one means more put contracts are open than call contracts.Beginner, Trap check](/learn/questions/what-is-pcr)
5. [B05What is max pain, and does max pain theory work?Max pain is the strike where option buyers would collect the least from the writers at expiry, worked out from open interest alone, so it is a calculation and not a forecast.Intermediate, Trap check](/learn/questions/does-max-pain-work)
6. [B06What are open interest, change in OI and cumulative OI?Open interest is the number of contracts still open at the end of a session, which NSE's files count in units, so one lot of 65 units is one contract.Beginner](/learn/questions/what-is-open-interest)
7. [B07Long build-up, short build-up, short covering, long unwinding?The four patterns read price and open interest together, for one contract on one day: price and OI both up is a long build up, price down with OI up is a short build up, price up with OI down is short covering and both down is long unwinding.Beginner](/learn/questions/long-short-build-up)
8. [B08What do IV and IVP mean in the option chain?IV in the option chain is the implied volatility of each traded strike, found by inverting its settle price through the Black 76 model, and the at the money reading is the one most often quoted.Intermediate](/learn/questions/iv-and-ivp-in-option-chain)
9. [B09What do participant wise OI, the FII long short ratio and FII and DII data tell me?The participant file counts open contracts for four groups, Client, DII, FII and Pro, across futures and options, and an FII long to short ratio is only one group's count, not a signal of where the index goes next.Intermediate, Trap check](/learn/questions/participant-wise-oi-fii-data)
10. [B10Does the ATM straddle price tell me the expected move?The price of the at the money straddle, a call and a put at the same strike added together, is a rough measure of the move the options market expects by expiry, and the usual shortcut reads it as about four fifths of one standard deviation of the move.Intermediate](/learn/questions/atm-straddle-expected-move)
11. [B11Volume or open interest: which matters?Volume counts the contracts traded during a session, and open interest counts the contracts still open at the close.Beginner](/learn/questions/volume-or-open-interest)
12. [B12Where do I get historical option chain and F&O data in India?NSE publishes end of day F&O files for each session, with the settle price, open interest and volume for every listed strike, and that is enough to rebuild a past chain from official data.Intermediate](/learn/questions/historical-option-chain-data)

## CGreeks
10 questions, 10 answered.

1. [C01What are option Greeks (Greeks kya hai)?The Greeks are sensitivities that tell you how an option's price moves when the future moves, when time passes, when volatility changes and when interest rates change.Beginner](/learn/questions/what-are-option-greeks)
2. [C02What is delta, with an Indian example?Delta is how much an option's premium moves when the future moves one point, and it doubles as a hedge ratio, the number of futures that offset the option's move.Beginner](/learn/questions/what-is-delta)
3. [C03What is gamma, and what is a "gamma blast"?Gamma is how fast an option's delta changes when the index moves, and it is largest for the strike at the money in the last days before expiry.Intermediate, Trap check](/learn/questions/what-is-gamma)
4. [C04What is theta decay, and how fast is it on expiry day?Theta is the amount an option loses each day from the passing of time alone, with the index and volatility held where they are.Beginner](/learn/questions/theta-decay-on-expiry)
5. [C05What is vega, and why does an option gain when volatility rises?Vega is the change in an option's price for a one point change in its implied volatility, and it is positive for both calls and puts.Intermediate](/learn/questions/what-is-vega)
6. [C06How do I calculate Greeks and read position Greeks for a multi leg trade?You calculate each Greek for one option from its model inputs, then add the Greeks of every leg with a plus sign for a bought leg and a minus sign for a sold leg, and multiply by the lots and the lot size to get the position figure.Intermediate](/learn/questions/how-to-calculate-greeks)
7. [C07What is a delta neutral strategy or delta hedging?Delta neutral means the net delta of a position is close to zero, so a small move in the future changes its value very little, and delta hedging is the act of adding futures or other options to pull the net delta back toward zero as the market moves.Intermediate](/learn/questions/delta-neutral-and-delta-hedging)
8. [C08What is gamma scalping?Gamma scalping holds a long gamma position and re-hedges the futures as the index moves, so the re-hedging gains come from realised moves while the option premium is the implied move paid at the start.Advanced](/learn/questions/what-is-gamma-scalping)
9. [C09What are vanna and charm?Vanna is how much an option's delta changes for a one point move in implied volatility, and charm is how much its delta drifts as a day passes.Expert](/learn/questions/vanna-and-charm)
10. [C10Does rho matter in India?Rho is the change in an option's price for a one percentage point change in the interest rate, and for short dated NSE index options it is small next to delta, gamma and vega.Intermediate](/learn/questions/does-rho-matter)

## DVolatility
18 questions, 18 answered.

1. [D01What is implied volatility?Implied volatility is the volatility figure that makes an option's model price equal its market price, given the index level, the strike, the time to expiry and the interest rate.Beginner](/learn/questions/what-is-implied-volatility)
2. [D02How do I calculate IV for Nifty options?You find the implied volatility by taking an option's settle price, the future, the strike, the time to expiry and the rate, then solving the Black 76 model for the volatility that returns that price, usually with a numerical search.Intermediate](/learn/questions/calculate-iv-nifty-options)
3. [D03Historical, implied and realised volatility: what is the difference?Historical and realised volatility are both measured from past closes, and the difference between them is only the window and the method, while implied volatility is read from the prices people pay today.Intermediate](/learn/questions/historical-implied-realised-volatility)
4. [D04IV rank or IV percentile: what is the difference?IV rank places today's implied volatility between the lowest and the highest reading of the trailing year, so one spike sets the top of the scale and can squeeze every later reading low.Intermediate](/learn/questions/iv-rank-vs-iv-percentile)
5. [D05What is India VIX?India VIX is NSE's measure of the movement that Nifty options price in over the next thirty calendar days, quoted as an annual percentage.Beginner](/learn/questions/what-is-india-vix)
6. [D06What does a high India VIX mean, and is VIX above 20 dangerous?A high India VIX means option prices imply a large expected move in the Nifty over the next thirty calendar days, and the figure is annualised, so it is not a forecast of direction.Beginner, Trap check](/learn/questions/high-india-vix-meaning)
7. [D07How are India VIX and Nifty related?India VIX and the Nifty tend to move in opposite directions on the same day, so a fall in the index usually comes with a rise in VIX.Beginner](/learn/questions/india-vix-and-nifty)
8. [D08How is India VIX calculated?India VIX is built from the prices of out of the money Nifty options in the near and next month expiries, blended to a thirty calendar day horizon, using the forward level and a money market rate, so it is a variance measure read from option prices.Advanced](/learn/questions/how-india-vix-is-calculated)
9. [D09What is IV crush around results and the Budget?IV crush is the fall in an option's implied volatility once an expected event has passed, and it lowers the premium even when the index moves the way the market expected.Intermediate](/learn/questions/what-is-iv-crush)
10. [D10Volatility smile or skew: what is the difference?A volatility smile is the curve of implied volatility across strikes for one expiry, and it is usually lowest near the money and higher at both ends.Intermediate](/learn/questions/volatility-smile-vs-skew)
11. [D11Why are Nifty OTM puts pricier than calls?On the chain used here, out of the money Nifty puts carried a higher implied volatility than calls at the same distance from the future, and that tilt is the volatility skew.Advanced](/learn/questions/why-otm-puts-cost-more)
12. [D12Term structure: why do weekly and monthly IVs differ?Weekly and monthly expiries cover different numbers of days, so their implied volatilities differ when the market prices an event inside one expiry and not the other, and the term structure shows that gap across all the expiries on one date.Advanced](/learn/questions/weekly-vs-monthly-iv)
13. [D13What is forward volatility and how does it relate to calendar spreads?Forward volatility is the volatility implied by option prices for the window between two expiries, found from total variance: the further expiry total minus the nearer one, divided by the time between them.Advanced](/learn/questions/what-is-forward-volatility)
14. [D14How do I estimate the expected move from IV?The expected move over a period is roughly spot times implied volatility times the square root of the time to expiry, and it reads as a one standard deviation band, so the index should close inside it about two times in three if the model holds.Intermediate](/learn/questions/expected-move-from-iv)
15. [D15Is option selling paid for taking risk (the variance risk premium)?The variance risk premium is the gap between the variance that option prices imply and the variance that the index later realises, and a positive gap is the usual explanation for why option sellers can earn on average for taking that risk.Advanced](/learn/questions/variance-risk-premium)
16. [D16What is a variance swap?A variance swap pays the difference between realised variance over its life and a strike fixed at the start, so it is a bet on how much the index moves rather than where it ends.Expert](/learn/questions/what-is-a-variance-swap)
17. [D17How do volatility forecasting models like GARCH work?GARCH models forecast volatility by making today variance depend on yesterday squared return and yesterday variance, so large moves raise the forecast for the days after and calm sessions pull it down.Advanced](/learn/questions/garch-volatility-forecasting)
18. [D18What are the volatility surface, SABR and local volatility?The volatility surface lays implied volatility out across strikes and expiries, and SABR is a model that fits the smile of one expiry with four parameters.Expert](/learn/questions/volatility-surface-sabr)

## EStrategies and spreads
18 questions, 18 answered.

1. [E01Straddle or strangle: what is the difference?A straddle uses one strike, the one nearest the index, for both the call and the put.Intermediate](/learn/questions/straddle-vs-strangle)
2. [E02Short straddle or short strangle: what is the “success rate” and the risk?A success rate counts how often a short straddle or strangle expires inside its breakevens, and it says nothing about how large the loss is on the days it fails.Intermediate, Trap check](/learn/questions/short-straddle-success-rate)
3. [E03Iron condor, iron fly and butterfly on Nifty: setup and "success rate"?An iron condor is a short strangle with bought wings further out, so its profit is capped at the premium kept and its loss is capped at the width of the wings less that premium.Intermediate, Trap check](/learn/questions/iron-condor-nifty)
4. [E04What are a bull call spread and a bear put spread?A bull call spread buys a call and sells a call at a higher strike on the same expiry, so it gains as the index rises to the upper strike and stops gaining above it.Beginner](/learn/questions/bull-call-and-bear-put-spread)
5. [E05What are bull put and bear call credit spreads?A bull put credit spread sells a put and buys a lower put in the same expiry, so the seller receives a net credit and the bought put limits the loss.Intermediate](/learn/questions/credit-spreads-explained)
6. [E06How does a calendar spread on Nifty options work, and what margin does it need?A calendar spread sells a near expiry option and buys a later expiry option at the same strike, so it earns from the faster time decay of the near leg and from the shape of the volatility term structure.Intermediate](/learn/questions/nifty-calendar-spread)
7. [E07What are diagonal and double calendar spreads?A diagonal calendar sells a near expiry option and buys a later expiry option at a different strike, and a double calendar places two such calendars on either side of the money.Advanced](/learn/questions/diagonal-and-double-calendar)
8. [E08Ratio spreads, backspreads, jade lizard and broken wing butterfly: what are they?A ratio spread buys one option and sells more options of the same type at a further strike, so it has a band of profit near the sold strike and an open ended loss beyond it.Advanced](/learn/questions/ratio-spreads-and-backspreads)
9. [E09Covered call, protective put and collar: how do they work?A covered call holds the underlying and sells a call above the market, so the premium cushions a small fall but the gain stops at the strike.Beginner](/learn/questions/covered-call-protective-put-collar)
10. [E10Which option strategy suits a sideways, low VIX or volatile market?No strategy suits a market by its label, because a sideways view is a view on realised movement against implied volatility, and a range position is short volatility with the same gap and volatility risk as any other short option position.Intermediate, Trap check](/learn/questions/strategy-for-sideways-market)
11. [E11How do I adjust a short strangle or iron condor?Adjusting a short strangle or iron condor means changing the position after the index has moved toward one side, by rolling a leg, adding a wing or closing part of the trade.Intermediate, Trap check](/learn/questions/adjusting-strangle-or-condor)
12. [E12What are synthetic futures and a synthetic long?A synthetic long future is a long call and a short put at the same strike and expiry, and its expiry payoff matches a long future at that strike.Intermediate](/learn/questions/synthetic-futures)
13. [E13Do expiry day setups like the 9:20 straddle or "hero zero" work?The chain for 16 Jun 2026 shows what expiry day does at the close: every out of the money NIFTY option settled at zero and each in the money option at its intrinsic value.Intermediate, Trap check](/learn/questions/expiry-day-strategies)
14. [E14What happens to options around Budget day and results day?On the 2026 Budget session India VIX rose from the previous close and fell on the next trading day, which is how an event premium builds and drains.Intermediate, Trap check](/learn/questions/budget-day-option-strategy)
15. [E15Are there 0DTE options in India, and can I sell options on expiry day?Yes, a weekly contract has zero days to expiry on the day it expires, so Nifty weekly options on their expiry day are 0DTE, but a short dated contract is not a shortcut.Intermediate, Trap check](/learn/questions/zero-dte-options-india)
16. [E16Is there a "sure shot" option strategy with 90% accuracy?No option strategy is certain.Beginner, Trap check](/learn/questions/sure-shot-option-strategy)
17. [E17Can option selling give a "daily income"?Theta does accrue to a seller every day, but priced fairly, the premium kept in quiet weeks is paid back by the losses in the other weeks before costs, so the premium alone is not an income.Intermediate, Trap check](/learn/questions/option-selling-daily-income)
18. [E18How do I read a payoff diagram?A payoff diagram plots the profit or loss at expiry on the vertical axis against the index level on the horizontal axis.Beginner](/learn/questions/how-to-read-payoff-diagram)

## FHedging
9 questions, 9 answered.

1. [F01How do I hedge a stock portfolio with Nifty puts, and how many lots?The number of Nifty puts that offsets a stock portfolio is its value times its beta, divided by the value of one Nifty lot, and the premium is the cost of the floor.Intermediate](/learn/questions/hedge-portfolio-with-nifty-puts)
2. [F02How do I hedge a mutual fund portfolio?An individual investor cannot hedge a mutual fund with a derivative written on that fund, so the usual route is to hedge the index part of its risk with Nifty futures or puts, sized by the fund's beta against Nifty.Intermediate](/learn/questions/hedge-mutual-fund-portfolio)
3. [F03Hedge with futures or options: what is beta hedging?A short futures hedge offsets both the gains and the losses of an index exposure, while a bought put keeps the upside and covers the downside for a premium.Intermediate](/learn/questions/futures-or-options-to-hedge)
4. [F04Is buying puts every month worth it for a long term investor?Buying a put every month is a recurring premium for protection, and the price of that protection moves with implied volatility, so the monthly bill is not the same from one month to the next.Intermediate](/learn/questions/buying-puts-every-month)
5. [F05Are collars and put spreads cheaper hedges?A collar buys a put and pays for it by selling a call, so the net cost is lower but the gain is capped above the call; a put spread buys one put and sells a lower strike put, so the cover stops growing at the lower strike.Intermediate](/learn/questions/collars-and-put-spreads-cheaper)
6. [F06How does hedging before elections, the Budget or an RBI policy work?A hedge bought before an election, the Budget or a policy decision pays for the volatility the options market already prices for that event, and that premium usually falls back once the event passes.Advanced](/learn/questions/hedge-before-elections-budget)
7. [F07Tail risk hedging in India: what do long dated Nifty options do?A long dated Nifty put pays most when the index falls far and fast, and its premium is paid up front and lost if the fall does not come.Advanced](/learn/questions/tail-risk-hedging-india)
8. [F08How do I hedge an option selling position?A sold option position is hedged by buying a further out option that caps the loss on one side, or by holding a future that offsets the side the sold option is exposed to, and each hedge gives up part of the premium or adds exposure on the other side.Intermediate](/learn/questions/hedge-option-selling-position)
9. [F09What is basis risk when hedging a stock or fund with Nifty?Basis risk is the chance that a hedge and the holding it covers do not move together, so the hedge gains or loses what the holding does not.Advanced](/learn/questions/what-is-basis-risk)

## GArbitrage
8 questions, 8 answered.

1. [G01How does cash futures arbitrage work, and what does it earn?Cash and futures arbitrage buys the index basket in cash and sells the near month future when the future trades above its fair value by more than the costs, then holds to expiry, so the earning is the basis after costs and funding.Intermediate](/learn/questions/cash-futures-arbitrage)
2. [G02How do arbitrage funds work?An arbitrage fund buys shares in cash and sells futures on the same shares, so the gap between the two prices is its main source of return, and the rest of its money sits in debt and cash.Beginner](/learn/questions/how-arbitrage-funds-work)
3. [G03What is cost of carry, and why is Nifty futures at a premium?Cost of carry is what it costs to hold the index to a later date, which is the interest on the money tied up less the dividends the stocks pay in that window, so the future is priced above spot by that net cost for the time left.Intermediate](/learn/questions/cost-of-carry-futures-premium)
4. [G04What does futures rollover cost, and what is a futures calendar spread?Rolling a future means closing the expiring month and opening the next, and the cost is the roll spread: the next settle less the near settle, which is the price of carrying the position for the extra days.Intermediate](/learn/questions/futures-rollover-cost)
5. [G05Can I arbitrage put call parity?Put call parity ties a call, a put, the future and the strike at one expiry together, and a gap between the two sides can be traded, but only when it is larger than the full cost of the legs and the margin they tie up.Intermediate](/learn/questions/put-call-parity-arbitrage)
6. [G06Is a box spread in India "risk free"?A box spread holds four option legs that together pay the gap between two strikes at expiry, whatever the index does, so the market move does not decide the payoff.Advanced, Trap check](/learn/questions/is-box-spread-risk-free)
7. [G07What are conversion and reversal arbitrage?A conversion is a long future, a long put and a short call at one strike and expiry, which fixes the result at expiry whatever the index does, and a reversal is the mirror image: short future, short put and long call.Advanced](/learn/questions/conversion-and-reversal)
8. [G08Is arbitrage still possible, or legal, for retail in India?Arbitrage is an ordinary market trade that a retail account can place, so the rules do not ban the idea, but the trade only pays when the price gap left after every cost is positive.Intermediate](/learn/questions/arbitrage-for-retail-india)

## HDealer positioning and flows
7 questions, 7 answered.

1. [H01What is GEX (gamma exposure)?Gamma exposure, or GEX, adds up the gamma of every option strike, scaled by open interest and the index level, to estimate how much hedging the option writers would need to do as the index moves.Advanced](/learn/questions/what-is-gex)
2. [H02Is Nifty GEX reliable in India?Nifty GEX can be computed, but it cannot be checked against positioning, because no exchange publishes dealer or customer positions by strike, so its sign and its zero gamma level depend on the convention and the expiries chosen.Advanced, Trap check](/learn/questions/is-nifty-gex-reliable)
3. [H03What are the call wall, put wall and zero gamma (gamma flip)?The call wall and put wall are the strikes above and below the index with the largest call and put gamma exposure, and the zero gamma level, or gamma flip, is the index level where the total exposure changes sign under the assumed convention.Advanced](/learn/questions/call-wall-put-wall-zero-gamma)
4. [H04Who are the market makers and option sellers in India?Option sellers in India are a mix of groups, and the public NSE participant file lists four of them, Client, DII, FII and Pro, without naming market makers or saying who wrote a given option.Intermediate](/learn/questions/who-are-option-sellers-india)
5. [H05What is a gamma squeeze?A gamma squeeze is a story in which dealers who are short calls buy the underlying as it rises, which pushes it higher and makes them buy more.Advanced](/learn/questions/what-is-a-gamma-squeeze)
6. [H06Does Nifty pin to big OI strikes at expiry?Pinning is the idea that the index settles near the strike with the largest open interest, and the research on expiry clustering is about individual US stocks, where prices sometimes gather near option strikes, which is narrower than a claim about the Nifty close.Advanced](/learn/questions/does-nifty-pin-to-oi-strikes)
7. [H07What are vanna and charm flows?Vanna measures how delta changes when implied volatility moves, and charm measures how delta changes as time passes, so a hedge built on one day's delta is out of date by the next.Expert](/learn/questions/vanna-and-charm-flows)

## IQuant and relative value
9 questions, 9 answered.

1. [I01What is pair trading, and is there an NSE pair trading stock list?Pair trading takes a position in two related prices when their spread moves far from its usual level, betting that the spread returns, so it trades the gap rather than the direction of the market.Intermediate, Trap check](/learn/questions/what-is-pair-trading)
2. [I02Cointegration or correlation: what is the difference?Correlation measures whether two prices move together in their daily changes, while cointegration asks whether a weighted gap between them returns to a stable level over time.Advanced](/learn/questions/cointegration-vs-correlation)
3. [I03How do I compute the half life and z score of a pair?The spread of a pair is the series to study, its half life is the time a gap takes to close half way back to the mean, and its z-score is the gap in units of its own recent standard deviation.Advanced](/learn/questions/pair-half-life-and-z-score)
4. [I04How do people pair trade in India without shorting stocks overnight?In India a retail account cannot generally carry a cash market short overnight, so a pair meant to last several sessions usually runs on stock futures for both legs.Advanced](/learn/questions/pair-trading-without-overnight-shorts)
5. [I05What is statistical arbitrage?Statistical arbitrage trades many small, hedged bets on prices that have moved away from a statistical relation, and it expects them to move back.Advanced](/learn/questions/what-is-statistical-arbitrage)
6. [I06What is dispersion trading?Dispersion trading sells volatility on the index and buys volatility on the stocks inside it, so it earns when the stocks move more independently than the index's option prices imply.Expert](/learn/questions/what-is-dispersion-trading)
7. [I07Mean reversion or momentum: what is the difference?Momentum bets that a move keeps going, and mean reversion bets that a stretched price returns toward its average, so the two give opposite answers to the same question about the last move.Intermediate](/learn/questions/mean-reversion-vs-momentum)
8. [I08Does machine learning work for trading?Machine learning can find structure in market data, but a model that scores well on the data used to build it has not shown a tradable edge.Advanced, Trap check](/learn/questions/does-machine-learning-work-for-trading)
9. [I09What is a Kalman filter pairs strategy?A Kalman filter pairs approach updates the hedge ratio between two series after each new price, rather than fitting it once on a past window, so it can follow a relationship that drifts.Expert](/learn/questions/kalman-filter-pairs)

## JAlgo trading, microstructure and HFT
11 questions, 11 answered.

1. [J01Is algo trading legal in India for retail?Yes, a retail investor can run an algo in India through a SEBI regulated broker's API, within rules on order rate, registration and who may use or sell the algo.Beginner](/learn/questions/is-algo-trading-legal-in-india)
2. [J02What are SEBI's algo rules (static IP, 10 orders per second, algo ID)?SEBI's retail algo framework, set out in its circular of 4 Feb 2025, runs algo orders through the broker's API under a static IP, a client specific key and two factor login, and it asks exchanges to tag every algo order with an identifier.Intermediate](/learn/questions/sebi-algo-rules)
3. [J03Do SEBI registered algo platforms make algo trading profitable?No, SEBI's rules for retail algos govern who may run an algo, how orders are tagged and who may make return claims, and none of them promises that a strategy will make money.Beginner, Trap check](/learn/questions/algo-platforms-and-profitability)
4. [J04How do people build an algo with Python and broker APIs?A Python algo is a program that reads prices, forms a signal, checks risk and sends orders through a broker's API, and in India that last step must follow the broker's key, static IP and login rules and the SEBI retail framework.Intermediate](/learn/questions/build-an-algo-with-python)
5. [J05HFT, MFT and LFT: what is the difference?HFT, MFT and LFT are shorthand for how fast and how long a strategy holds and reacts, not formal SEBI categories, running from microseconds and milliseconds at one end to days or weeks at the other.Intermediate](/learn/questions/hft-vs-mft-vs-lft)
6. [J06What was the NSE colocation case, and how does HFT work in India?The NSE colocation case began with complaints to SEBI in 2015 that some trading members got prices sooner from NSE's tick by tick data feed by logging in to lightly loaded servers first.Intermediate](/learn/questions/nse-colocation-case)
7. [J07What is market making?Market making means quoting a price to buy and a price to sell in the same contract, and earning the gap between them when both sides fill.Advanced](/learn/questions/what-is-market-making)
8. [J08What are the order book, bid ask spread, impact cost and tick size?The order book lists the buy and sell orders waiting at each price, and the bid ask spread is the gap between the best buy and the best sell price.Intermediate](/learn/questions/order-book-spread-impact-cost)
9. [J09What is slippage, and what are VWAP and TWAP?Slippage is the gap between the price a strategy expected and the price it actually got, and VWAP and TWAP are two benchmark prices that large orders are often sliced against.Intermediate](/learn/questions/slippage-vwap-twap)
10. [J10Does order flow or footprint chart trading work?Order flow and footprint charts show traded volume split by price and by side, which is real and useful for describing a session, but using them to forecast price has not been shown with public data for Indian index options.Intermediate, Trap check](/learn/questions/order-flow-trading)
11. [J11What did SEBI's July 2025 expiry day interim order allege?SEBI's interim order of 3 Jul 2025 alleged, on a prima facie basis, that a trading group built large cash equivalent positions in index options and moved index prices on expiry days in ways that favoured those positions, and it issued interim directions while the matter was investigated.Intermediate](/learn/questions/sebi-expiry-day-interim-order)

## KBacktesting and research
6 questions, 6 answered.

1. [K01How do I backtest an option strategy in India, or in Python?Backtest an option strategy by writing the rule down before opening the data, then testing it on dated end of day chains with the lot size, expiry rules and costs of each date, over a period the rule never saw.Intermediate](/learn/questions/backtest-option-strategy)
2. [K02What are overfitting, look ahead bias and survivorship bias?Overfitting means a rule has been tuned to the noise in one sample, so it looks strong there and fails on new data.Advanced](/learn/questions/overfitting-and-biases)
3. [K03What is walk forward testing?Walk forward testing fits a rule on one stretch of past data, tests it on the next stretch it has not seen, then moves both windows forward and repeats.Advanced](/learn/questions/what-is-walk-forward-testing)
4. [K04Sharpe, max drawdown, Kelly, position sizing and risk of ruin: how do they fit?The Sharpe ratio measures return per unit of volatility, max drawdown measures the worst fall from a peak, and the Kelly fraction sizes a bet from win rate and payoff ratio, so each answers a different question about the same strategy.Intermediate](/learn/questions/sharpe-drawdown-kelly-sizing)
5. [K05How do I use Monte Carlo to test strategy risk?Monte Carlo testing redraws a strategy's trade results many thousands of times, so the spread of outcomes that the same win rate and payoff could produce becomes visible.Advanced](/learn/questions/monte-carlo-strategy-risk)
6. [K06Must a backtest include STT and costs?Yes: a backtest that leaves out STT, exchange charges, GST, stamp duty and slippage reports a gross result that no account earned, and STT has changed in steps, so each historical trade needs the rate that applied on its own date.Intermediate](/learn/questions/backtest-include-stt)

## LTax
4 questions, 4 answered.

1. [L01How is F&O income taxed, which ITR applies, and what changed under the new Act?Exchange traded F&O income is non speculative business income, so a profit or loss goes into the business head and is reported on ITR-3 for the assessment year that follows the trading year.Beginner](/learn/questions/how-is-fo-income-taxed)
2. [L02Can I carry forward and set off F&O losses?An F&O loss is a non speculative business loss, so it can be set off against other income except salary in the same year, and any unused balance carries forward for up to eight years against business income only.Beginner](/learn/questions/carry-forward-fo-losses)
3. [L03How is F&O turnover calculated, and when is a tax audit required?For the audit test, F&O turnover is the sum of the favourable and unfavourable differences on each trade, plus premium received on options sold unless that premium already sits in net profit.Intermediate](/learn/questions/fo-turnover-and-tax-audit)
4. [L04How does the 2026 STT hike change my costs?From 1 Apr 2026 the STT rose on all three F&O charges: 0.15% on an option sale, 0.15% on an option exercised, and 0.05% on a futures sale.Beginner](/learn/questions/stt-hike-2026)

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