Finance Dictionary

ASM (Additional Surveillance Measure) and GSM (Graded Surveillance Measure) are frameworks run by the exchanges with SEBI. A stock placed on either list can face higher margin requirements or tighter trading limits. If a stock you hold is added, expect it to become harder to trade and check the exchange notice for the exact stage and rules.

Related: SEBI, NSE, Circuit Limit

When an option finishes in the money, the clearing corporation assigns the obligation to a seller, who must then settle it. In India stock options settle by physical delivery, so an assigned stock call seller has to deliver the shares. This is why holding a short in the money stock option into expiry needs planning rather than hope.

Related: Expiry, NSE Clearing, STT

At the money contracts carry the most time value and usually the heaviest trading volume, so they are the easiest to enter and exit. They also decay the fastest in the final days before expiry, which cuts both ways depending on whether the position is bought or sold.

Related: In the Money, Out of the Money, Theta, Gamma

Because it follows only banks, Bank Nifty reacts sharply to interest rate news, credit data and results from a few large lenders. It tends to move more than the Nifty 50 in percentage terms, so a single contract can swing faster. Check the current lot size before you size a position.

Related: Nifty 50, Index, Lot Size, India VIX

The spread is a real cost, paid the moment a position is opened and again when it is closed. A one rupee spread on a contract of 65 units costs ₹65 each way before any brokerage. Liquid contracts have tight spreads, thin ones can have spreads wide enough to make a strategy unworkable.

Related: Liquidity, Slippage, Market Order

Block deals let big buyers and sellers, such as funds or promoters, move a large quantity without disturbing the regular order book. The price has to stay close to the market price, and the minimum size is set by the exchanges, so check the current rule.

Related: Bulk Deal, Liquidity, Promoter Holding

In a 1:1 bonus you get one new share for each share you hold. The company is not giving you value from outside: it converts its reserves into shares, the share count rises, and the price adjusts down so the total value of your holding stays about the same on the day.

Related: Stock Split, Dividend, Rights Issue

Book value comes from the balance sheet, so it reflects accounting values, not market prices. It is most useful for businesses that own a lot of assets, such as banks, and much less useful for companies whose worth lies in brands or software.

Related: P/B Ratio, EPS (Earnings Per Share), Market Capitalisation

For a bought call it is the strike plus the premium, and for a bought put the strike minus the premium. That textbook figure is before charges. Adding STT, brokerage, exchange and SEBI fees, stamp duty and GST moves the real breakeven further away, and on short holding periods the gap is large enough to change which trades are worth taking.

Related: STT, Brokerage, GST, Slippage

Breakouts attract attention because a move out of a range can start a longer run. Many of them fail and return into the range, which is why volume and follow through are looked at rather than the first move alone. Entering on the break and placing a stop back inside the range is the common way to size that risk.

Related: Support, Resistance, Volume, Stop Loss

Discount brokers typically charge a flat amount per executed order rather than a percentage, so brokerage matters most to traders who place many small orders. It is the only charge in the list that is negotiable and that differs between brokers, since the rest are set by the exchange, SEBI or the government.

Related: GST, Breakeven, Exchange Transaction Charge

The BSE lists a large number of companies and runs its own derivatives segment on the Sensex and Bankex indices. Liquidity in Indian equity derivatives has historically concentrated on the NSE, so contract choice usually follows where the volume is rather than which exchange is preferred.

Related: NSE, SEBI, Index

Exchanges publish bulk deals at the end of the day with the names of the buyer and seller. They show where large investors are putting or taking out money, but a single deal does not tell you why, so treat it as one clue rather than a signal.

Related: Block Deal, Liquidity, NSE

A buyback reduces the number of shares in the market, so each remaining share represents a bigger slice of the company. It is another way of returning cash to shareholders besides a dividend. Whether it is a good sign depends on why the company is doing it and at what price.

Related: Dividend, EPS (Earnings Per Share), Market Capitalisation

The buyer pays a premium for that right and can walk away if the price never rises. The most they can lose is the premium paid. The seller collects the premium and takes on the obligation to deliver if the buyer exercises, which is why a seller's risk is far larger than a buyer's.

Related: Put Option, Strike Price, Premium, Assignment

The body spans the open and close, and the wicks reach the high and the low, so a single mark carries four figures. Candlesticks are read for what they say about the balance between buyers and sellers within the period. They describe what happened, and treating any single pattern as a reliable forecast is where most beginners go wrong.

Related: Trend, Volume, Support

An account that is still open can trade again, and one that is not cannot. This is the reasoning behind position limits, stop losses and daily loss caps, all of which reduce returns in the good stretches in exchange for surviving the bad ones. It is a choice about time horizon rather than about caution.

Related: Drawdown, Position Sizing, Maximum Loss

Circuit limits slow down disorderly moves and give participants time to react. When a stock is locked at a circuit there may be orders on only one side, so a position cannot be exited at any price. That is a risk worth understanding before trading small and volatile counters.

Related: Liquidity, NSE, Slippage

Delta runs from 0 to 1 for calls and 0 to minus 1 for puts. An at the money option sits near 0.5, deep in the money contracts approach 1, and far out of the money contracts approach zero. It is also read loosely as the market's estimate of the chance the option finishes in the money.

Related: Gamma, In the Money, Out of the Money

Demat is short for dematerialised: paper certificates are replaced by entries held with a depository. When you buy a share, it is credited to your demat account, and when you sell it, it is debited. You normally need a demat account, a trading account and a bank account linked together to invest.

Related: Trading Account, Depository (NSDL and CDSL), DP Charges

India has two depositories, NSDL and CDSL. They keep the master record of who owns what, and your broker, called a depository participant, gives you access to it. Because ownership is recorded at the depository, your shares stay yours even if your broker has a problem.

Related: Demat Account, DP Charges, SEBI

The benefit comes from low correlation, not from count. Five index option positions in the same direction on the same expiry are one position wearing five names, and they will all go wrong together. Real diversification needs holdings that respond to different things.

Related: Hedging, Capital Preservation

A company decides whether to pay a dividend and how much, so it is never guaranteed. You receive it only if you hold the share on the record date. After the payout the share price usually adjusts down by about the same amount, so a dividend is a transfer of value, not free money.

Related: Dividend Yield, Bonus Issue, Buyback

The yield moves with the price: if the price falls and the dividend stays the same, the yield rises, which can look attractive even when the fall signals trouble. A very high yield is worth a second look at whether the dividend can be sustained.

Related: Dividend, P/E Ratio, Market Capitalisation

DP stands for depository participant, your broker in its role as the gateway to the depository. The fee is usually charged per company per day on sales, no matter how many shares you sell, so it hurts small sales more. It is separate from brokerage, STT and GST.

Related: Demat Account, Depository (NSDL and CDSL), Brokerage, GST

Drawdown matters more than any single loss because recovery is not symmetrical. A 50 percent fall needs a 100 percent gain to get back to level. Knowing the drawdown a strategy has historically produced is what tells someone whether they can actually sit through it.

Related: Mark to Market, Capital Preservation, Position Sizing

EPS tells you how much profit belongs to each share. Rising EPS over several years is a sign of a growing business, but a one-off gain can inflate it for a single year, so look at the trend and not one number.

Related: P/E Ratio, Buyback, Book Value

Most ETFs simply copy an index such as the Nifty 50, so you get the whole basket in one purchase. You buy and sell units through your trading account at the live market price, and the price can drift slightly away from the fund's NAV.

Related: Index Fund, NAV (Net Asset Value), Nifty 50, Expense Ratio

Charged on both the buy and the sell leg, and calculated on premium turnover rather than contract value. Together with brokerage it forms the base that GST is then applied to, so it has a small second order effect as well.

Related: GST, Brokerage, Breakeven

The fee is taken out of the fund's assets every day, so you never see a bill, but it lowers your return. A small difference compounds over many years. Compare funds of the same type, and compare direct plans with regular plans, before you choose.

Related: Mutual Fund, Index Fund, ETF (Exchange Traded Fund), Brokerage

Every Indian option is European, so it can only be exercised on the expiry date itself, never before. Index contracts expire weekly and monthly, stock contracts monthly. As expiry approaches, time value drains away faster, which is why the last days behave very differently from the first.

Related: Time Value, Theta, Rollover, NSE Clearing

Exposure margin covers the risk that a move turns out larger than the SPAN scenarios allowed for. Total margin blocked is SPAN plus exposure, and it is the second figure that often surprises someone comparing a broker's quoted requirement with what actually leaves the account.

Related: SPAN Margin, Margin

Every stock in the F&O segment has a market-wide limit on total open positions. When it comes close, the exchange puts the stock in a ban period. You can still close existing positions, but opening new ones, or increasing them, can attract a penalty. The ban lifts once open interest falls back.

Related: Open Interest, Futures Contract, Lot Size

A small free float means few shares change hands, which can make a price jumpy and exits harder. Index providers use free float, not total shares, to decide how much weight a company carries in an index like the Nifty 50.

Related: Promoter Holding, Liquidity, Nifty 50

Unlike an option, a futures contract carries an obligation for buyer and seller alike, so there is no premium and no right to walk away. Profit and loss move point for point with the underlying, and both are theoretically unlimited. Positions are marked to market daily rather than settled only at expiry.

Related: Margin, Mark to Market, Rollover, Leverage

Gamma is highest for at the money options close to expiry, which is exactly when a position can change character within minutes. A seller with high gamma against them can watch a comfortable trade turn painful on a small move, so it is the number that explains sudden expiry day losses.

Related: Delta, At the Money, Expiry

The grey market is an unofficial market with no exchange, no SEBI oversight and no guarantee that anyone will honour a deal. The premium can be moved by a few people and often differs from where the stock actually lists. Treat it as gossip, not as a forecast.

Related: IPO (Initial Public Offering), SEBI, Liquidity

GST is charged on the service fees rather than on turnover, so it does not apply to STT or stamp duty. It is small in absolute terms on any single trade, and it compounds with brokerage across a high frequency of orders.

Related: Brokerage, Exchange Transaction Charge, Breakeven

An ordinary order expires at the end of the trading day. A GTT sits with the broker for a much longer window, so a level can be watched without logging in daily. It is a broker facility rather than an exchange order, so it only reaches the exchange once the trigger fires.

Related: Stop Loss, Limit Order

A hedge gives up some potential gain in exchange for a smaller possible loss, which is the whole bargain. Buying a put against a holding is the simplest form. Because SPAN looks at the portfolio as a whole, a hedged position also attracts materially less margin than the same legs held on their own.

Related: Put Option, SPAN Margin, Maximum Loss, Diversification

Implied volatility is not a forecast of direction, only of size. High readings make every option on that underlying expensive, low readings make them cheap. Buying when it is high and selling when it is low is a common and avoidable mistake, because the reading tends to return towards its usual range.

Related: Vega, India VIX, Premium

A call is in the money when the spot price is above its strike, a put when spot is below. These contracts carry intrinsic value, so they cost more and move more closely with the underlying. They are also the ones that get exercised at expiry, which brings settlement obligations with them.

Related: Out of the Money, At the Money, Intrinsic Value, STT

The Nifty 50 tracks fifty large companies and is the basis for India's most heavily traded derivatives. An index cannot be bought directly, so exposure is taken through its futures, options or an index fund. Index contracts also settle in cash, which avoids the delivery obligations that stock contracts carry.

Related: NSE, Futures Contract, India VIX, Lot Size

Because the fund copies the index and does not pick stocks, its costs are usually low. Its return will be close to the index return, minus a small tracking difference. If the index falls, so does the fund.

Related: Mutual Fund, ETF (Exchange Traded Fund), Index, Expense Ratio

India VIX is calculated from Nifty option prices, so it reflects what option buyers and sellers are collectively paying for protection. It usually rises when the market falls sharply and settles in calm periods. A high reading makes option premiums expensive across the board, which matters as much to a seller as to a buyer.

Related: Implied Volatility, Vega, Index

For a call it is the spot price minus the strike, for a put the strike minus spot, and it is never less than zero. Only in the money options have any. This is the portion that survives to expiry, because it does not decay with time.

Related: Time Value, Premium, In the Money

In an IPO you apply for shares within a price band during a short subscription window, and allotment is decided by the company and the rules. Not every applicant is allotted shares, and the listing price can be higher or lower than the issue price. Read the offer document before you apply.

Related: Grey Market Premium (GMP), Lock-in Period, SEBI, Market Capitalisation

SEBI's scheme ranks companies by market cap: the largest 100 are large caps, the next 150 are mid caps and the rest are small caps. Large caps tend to be steadier. Smaller companies can grow faster but are usually more volatile and harder to trade in size.

Related: Market Capitalisation, Liquidity, SEBI

Because derivatives require only margin rather than the full contract value, a small deposit controls a large exposure. That multiplies gains and losses by exactly the same factor, and the losses are the half that gets underestimated. Most accounts that fail quickly do so through size, not through picking the wrong direction.

Related: Margin, Position Sizing, Lot Size, Drawdown

A limit order guarantees price but not execution, which is the exact reverse of a market order. It may sit unfilled while the market moves away, so it protects against a bad fill and risks no fill at all. In illiquid contracts it is usually the safer default.

Related: Market Order, Bid Ask Spread, Liquidity

Liquidity shows up as tight spreads, heavy volume and a deep order book. Index options at nearby strikes are among the most liquid contracts in India, while far strikes and many stock options are not. Entering something illiquid is usually easy, and leaving it is where the cost appears.

Related: Bid Ask Spread, Slippage, Volume, Open Interest

Lock-ins appear in several places: tax-saving ELSS mutual funds have a three year lock-in, and some shares from an IPO or held by promoters are locked for a set time. Anything locked in cannot be sold in an emergency, so only commit money you will not need.

Related: IPO (Initial Public Offering), Mutual Fund, Promoter Holding, Liquidity

Derivatives cannot be traded in single units. The exchange fixes a lot size per underlying and revises it periodically, so every quoted price has to be multiplied by that number to get the real rupee exposure. This is the single most common place a beginner underestimates position size.

Related: Premium, Position Sizing, Margin

Long term gains on listed equity are taxed differently from short term gains, and the Budget can change both the rate and any exemption limit. Because the rules move, confirm the latest position before you plan a sale around the tax date.

Related: STCG (Short Term Capital Gain), STT, Mutual Fund

Margin is not the cost of the trade, it is collateral held while the position is open, and it is returned when the position closes. It is calculated as SPAN plus exposure and is revised as prices move. If the balance falls short the broker issues a margin call, and an unmet call can lead to the position being squared off without consent.

Related: SPAN Margin, Exposure Margin, Mark to Market, Leverage

You pay part of the cost and the broker pays the rest, holding the shares as security. Interest accrues every day you keep the position, and if the price falls enough the broker can ask for more money or sell the shares. Borrowing makes both gains and losses larger.

Related: Leverage, Margin, Pledge, Brokerage

In futures the day's profit is credited and the day's loss is debited every evening rather than waiting for expiry, so the running loss becomes a real cash outflow immediately. A trader who plans only for the eventual outcome and not for these daily debits can be forced out of a position that would have worked.

Related: Margin, Futures Contract, Drawdown

Market cap measures what the market thinks the whole company is worth today, not what it earns or owns. A stock with a high price is not necessarily a large company, because the number of shares matters too. It is used to group companies into large, mid and small caps.

Related: Large, Mid and Small Cap, Free Float, P/E Ratio

A market order guarantees execution but not price. In a liquid contract the difference is negligible. In a thin one it can fill far from the last traded price, which is how a routine exit turns into an expensive one.

Related: Limit Order, Slippage, Liquidity, Bid Ask Spread

For a bought option it is the premium paid, and it is known exactly. For a sold option or a futures position it can be many times the margin blocked, and on a naked short call there is no arithmetic limit at all. Any position whose maximum loss cannot be stated as a number before entry is a position that has not been sized.

Related: Position Sizing, Hedging, Call Option, Leverage

You buy units of the fund and each unit represents a slice of everything the fund owns. Funds differ in what they hold, such as shares, bonds or a mix, and in how risky that is. They are regulated by SEBI, and you pay an annual fee called the expense ratio.

Related: NAV (Net Asset Value), SIP (Systematic Investment Plan), Expense Ratio, Index Fund

NAV is the fund's total assets minus its liabilities, divided by the number of units. It is calculated at the end of each trading day. A low NAV does not mean a fund is cheap and a high NAV does not mean it is expensive, because what matters is the return the fund earns, not the unit price.

Related: Mutual Fund, ETF (Exchange Traded Fund), Expense Ratio

The Nifty 50 is the number most people mean when they ask how the market did today. Companies are weighted by the value of their shares that are actually available to trade, so a larger free float counts for more. Nifty options and futures are among the most traded contracts in India.

Related: Index, NSE, Bank Nifty, Sensex

The NSE runs the electronic order book where buyers and sellers are matched, and it lists the Nifty index contracts that carry most of India's options volume. It sets lot sizes, trading hours and circuit limits for the instruments it lists.

Related: BSE, SEBI, NSE Clearing, Index

It stands between the two sides of every trade as the counterparty to both, so no participant has to assess whether the person on the other side can pay. This is why margin exists and why it is collected before a position rather than after a loss.

Related: Margin, Assignment, Expiry, NSE

Open interest rises when a new buyer and a new seller create a fresh position, and falls when positions are closed. It is different from volume, which counts every trade in a day including ones that opened and closed. Traders read it as a measure of how much money is committed at a given strike.

Related: Volume, Option Chain, Liquidity

Calls sit on one side, puts on the other, with strikes running down the middle. Each row carries premium, open interest, volume and implied volatility. Reading a chain is how most traders decide which strike to use rather than guessing from the spot price alone.

Related: Strike Price, Open Interest, Implied Volatility

A call is out of the money below its strike, a put above. The whole premium is time value, so these are cheap to buy and are where beginners are most often drawn. Cheap is not the same as good value: an out of the money option needs a real move in the right direction within a set time, and most of them expire at zero.

Related: In the Money, At the Money, Time Value, Delta

A P/B below one means the market values the company at less than the accounting value of its assets, which can mean a bargain or a business in trouble. Like P/E, it is best compared with similar companies, and it is used a lot for banks and financial firms.

Related: Book Value, P/E Ratio, Market Capitalisation

A high P/E can mean the market expects fast growth, or that the stock is expensive. A low P/E can mean it is cheap, or that the business is struggling. Only compare P/E across companies in the same industry, and never use it alone.

Related: EPS (Earnings Per Share), P/B Ratio, Market Capitalisation, Dividend Yield

The shares stay in your name and you confirm the pledge through the depository. The broker then gives you margin worth less than the full value of the shares, because it applies a discount called a haircut. If the shares fall, your margin falls with them.

Related: Margin, Margin Trading Facility (MTF), Depository (NSDL and CDSL), Promoter Holding

Size is worked out backwards from the risk, not forwards from the capital available. Fix the rupee amount that may be lost, measure the distance to the stop loss, and the number of lots falls out of those two figures. This is the part of a trading plan that decides survival, and it is the part most often skipped.

Related: Lot Size, Risk Reward Ratio, Maximum Loss, Leverage

During the pre-open session orders can be placed, changed and cancelled, but trades do not happen one by one. The exchange matches the collected orders at a single price, which becomes the opening price. It helps a stock open at a fair level after overnight news instead of lurching on the first trade.

Related: Limit Order, Market Order, NSE

Premium is quoted per unit and settled per lot, so the amount that actually leaves the account is the quote multiplied by the lot size. It splits into intrinsic value and time value, and understanding that split is what separates a considered option trade from a guess.

Related: Intrinsic Value, Time Value, Lot Size

A high and stable promoter holding can show that the owners are confident in the business, while a steady fall may need an explanation. Also watch for pledged promoter shares, because if those loans go wrong the shares can be sold into the market.

Related: Free Float, Pledge, Lock-in Period

A put gains value as the underlying falls, which makes it the standard way to protect a holding or to express a bearish view with capped risk. The buyer's loss is limited to the premium. The seller is obliged to buy at the strike if exercised, so a fall carries real cost for them.

Related: Call Option, Hedging, Strike Price

Resistance is the mirror of support. When a resistance area is broken decisively it often acts as support afterwards, because the participants who sold there change their view. Like support it describes behaviour that has happened before, not a prediction of what must happen next.

Related: Support, Breakout, Trend

Companies use rights issues to raise money without going to the public. The offer price is usually below the market price, but it is your choice: you can take it up, sell your entitlement, or let it lapse, in which case your stake is diluted.

Related: Bonus Issue, IPO (Initial Public Offering), Promoter Holding

A ratio of 1 to 2 means risking one rupee to make two. It works together with the win rate rather than on its own: a strategy that wins three times in ten can still come out ahead at 1 to 4, and one that wins seven times in ten can still lose money at 3 to 1. Both numbers have to be looked at together.

Related: Position Sizing, Stop Loss, Maximum Loss

Rollover keeps a view alive past the expiry date. It is two trades, so it carries two sets of charges and the price difference between the two contracts. Aggregate rollover figures at month end are watched as a rough signal of whether positions are being carried forward or abandoned.

Related: Expiry, Futures Contract, Brokerage

SEBI registers brokers, investment advisers and research analysts, sets the rules exchanges operate under, and acts against market abuse. Anyone giving paid investment advice in India must hold a SEBI registration, which is the first thing worth checking before paying for a tip or a course that promises returns.

Related: NSE, SEBI Turnover Fee, BSE

This funds the regulator and is roughly ten rupees per crore of turnover, so it is the smallest line on a contract note. It is listed here because a complete picture of costs is what makes a breakeven calculation honest.

Related: SEBI, Breakeven, Exchange Transaction Charge

Sensex is India's oldest widely quoted index. Because it holds only 30 companies it can move differently from the broader Nifty 50 on a given day, although the two usually travel in the same direction over time.

Related: BSE, Index, Nifty 50

Because the amount is fixed, an SIP buys more units when prices are low and fewer when they are high, which averages out your cost over time. It builds the habit of investing and removes the need to guess the right moment. It does not guarantee profit or protect you from a falling market.

Related: Mutual Fund, NAV (Net Asset Value), Diversification

Because it converts to a market order, SL-M is far more likely to execute than a stop loss limit, and far less likely to leave a losing position open because the price ran past the limit. The trade off is the fill price, which in a fast move can be well beyond the trigger.

Related: Stop Loss, Market Order, Slippage

Slippage grows with order size, with thin liquidity and with speed of movement, so it is worst in exactly the conditions where an exit matters most. It does not appear in a contract note as a separate line, which is why backtested results that ignore it tend to look better than live trading.

Related: Bid Ask Spread, Liquidity, Market Order, Breakeven

SPAN is a risk model run by the clearing corporation that tests a portfolio against a range of price and volatility scenarios and charges the largest resulting loss. Because it looks at the whole portfolio, a hedged position attracts far less SPAN than the same two legs held separately.

Related: Margin, Exposure Margin, Hedging

Stamp duty was standardised across states in 2020, so the rate no longer depends on where the account is held. It applies only when buying, which is what distinguishes it from the exchange and SEBI charges that fall on both legs.

Related: Breakeven, SEBI Turnover Fee

For listed equity, the holding period that separates short term from long term is twelve months. The tax rate is set by the Union Budget and has changed over time, so check the current rate or ask a tax professional. Losses can generally be set off against gains under the rules.

Related: LTCG (Long Term Capital Gain), STT, Breakeven

After a 1:5 split, one share becomes five and the price falls to about a fifth. The value of your holding does not change. Companies split shares to make the price easier for small investors to buy and to improve trading volume.

Related: Bonus Issue, Market Capitalisation, Liquidity

A stop loss caps the damage on a trade that goes wrong and removes the decision from the moment when it is hardest to make well. It is a trigger, not a guarantee: in a gap or a fast move the actual fill can be worse than the level set. Placing it where the original idea is proven wrong works better than placing it at an arbitrary rupee amount.

Related: SL-M, Slippage, Risk Reward Ratio, Maximum Loss

Exchanges list strikes at regular intervals around the current price, so a single expiry offers many contracts on the same underlying. The distance between the strike and the spot price is what makes an option in, at, or out of the money, and it drives almost everything about how the contract behaves.

Related: In the Money, At the Money, Out of the Money, Option Chain

STT applies on the sell leg of an options trade on premium value. The case that catches people out is an in the money option left to expire: STT is then charged on the settlement value rather than the premium, which can be dramatically larger. Squaring off before expiry avoids that treatment entirely.

Related: In the Money, Expiry, Breakeven, Assignment

Support is an area rather than an exact line, and it holds only until it does not. Traders use it to place stop losses just beyond, on the reasoning that a break through it says the original idea was wrong. Levels tested many times are watched by more participants, which is part of why they matter.

Related: Resistance, Trend, Breakout, Stop Loss

Settlement is when money and shares actually change hands. Under T+1, a share bought on Monday reaches your demat account on Tuesday, and the sale proceeds from a Monday sale are settled on Tuesday. The faster cycle reduces the time during which the other side of a trade can default.

Related: Demat Account, Mark to Market, NSE Clearing

Theta works against every option buyer and in favour of every seller, which is the core trade off between the two sides. It accelerates sharply in the final week before expiry. A buyer needs the underlying to move enough, and soon enough, to outrun what theta takes away each day.

Related: Time Value, Expiry, Vega

It is whatever remains of the premium after intrinsic value is taken out. Time value shrinks every day and reaches exactly zero at expiry, so an option holder is fighting the clock from the moment they buy. Higher implied volatility and more days remaining both raise it.

Related: Intrinsic Value, Theta, Implied Volatility, Expiry

The trading account is the order desk, while the demat account is the locker. Money moves between your bank account and the trading account, and the securities you buy land in your demat account. Brokerage and other charges are billed against the trading account.

Related: Demat Account, Brokerage, Margin

An uptrend shows higher highs and higher lows, a downtrend the reverse, and a range shows neither. Trend depends entirely on the time frame being looked at, so a chart can be rising on the weekly and falling on the hourly at the same time without contradiction. Naming the time frame is what makes the description useful.

Related: Support, Resistance, Breakout, Candlestick

Both calls and puts gain when implied volatility rises, so vega is positive for buyers and negative for sellers. It is why an option can lose money even when the underlying moves the right way: if volatility collapses at the same time, the fall in vega can outweigh the gain in delta.

Related: Implied Volatility, India VIX, Theta

Volume is used as a measure of participation behind a move. A breakout on heavy volume carries more weight than the same move on thin volume, because more participants acted on it. Volume counts every trade in the period, which is what makes it different from open interest.

Related: Open Interest, Liquidity, Breakout