Advanced Stock Market Course
Derivatives, professional strategies, and the risk discipline that keeps you in the game.
Introduction
This track goes beyond buying shares into derivatives and professional risk management. These tools use leverage, which can multiply both gains and losses — so discipline matters more here than anywhere else.
What Are Derivatives?
A derivative is a contract whose value is derived from an underlying asset — usually a stock or an index like Nifty. The two main types traded in India are futures and options.
Futures Contracts
A future is an agreement to buy or sell an asset at a fixed price on a fixed future date. Both parties are obligated to honour it. Profit and loss move point-for-point with the price, and you post a margin (a fraction of the full value) to trade.
Options: Calls & Puts
An option gives the right — but not the obligation — to trade at a set strike price before expiry.
| Type | Right to | You buy it when you expect |
|---|---|---|
| Call | Buy the asset | Price to rise |
| Put | Sell the asset | Price to fall |
The Option Greeks
The Greeks measure how an option's price reacts to different changes:
| Greek | Measures sensitivity to |
|---|---|
| Delta | The underlying's price move |
| Gamma | How fast Delta itself changes |
| Theta | Time decay (daily loss) |
| Vega | Changes in volatility |
Moneyness — ITM, ATM, OTM
These terms describe where the strike is relative to the current price:
- ITM (In The Money): already has intrinsic value.
- ATM (At The Money): strike ≈ current price.
- OTM (Out of The Money): no intrinsic value yet — only time value.
Core Options Strategies
Combine options with shares to match your view while controlling risk:
- Covered call: sell a call against shares you own to earn income.
- Protective put: buy a put to insure a holding against a fall.
- Cash-secured put: get paid to potentially buy a stock lower.
Spreads & Straddles
More advanced combinations let you bet on direction and volatility with controlled risk:
- Bull call spread: buy a call and sell a higher call — cheaper, defined risk/reward.
- Straddle: buy a call and a put at the same strike — profits from a big move either way.
- Iron condor: profits when price stays in a range.
Position Sizing
How much you risk per trade matters more than being right. A common professional rule is to risk only 1–2% of your capital on any single trade, so no one loss can seriously hurt you.
Risk Management & Stop-Losses
Always define your exit before you enter:
- Set a stop-loss on every trade.
- Target a risk-to-reward of at least 1:2.
- Never move a stop-loss further away out of hope.
Hedging Your Portfolio
Hedging reduces risk — for example buying index puts to protect a portfolio during uncertain times. It costs a little, like insurance, but limits large drawdowns.
Portfolio Construction & Diversification
Build a portfolio across sectors and asset types so a single bad bet can't sink you. Decide your allocation (e.g. large-cap, mid-cap, cash) and rebalance periodically to keep risk aligned with your goals.
Trading Psychology
Your mindset is your biggest edge — or your worst enemy. Fear and greed cause most losses. The market is designed to trigger emotional decisions; your job is to stay rule-based.
- Accept small losses without ego.
- Don't overtrade or revenge-trade after a loss.
- Follow your plan even when it's boring.
Keeping a Trading Journal
Record every trade — entry, exit, reason, and outcome. Reviewing your journal weekly reveals patterns in your wins and mistakes, and turns experience into skill faster than anything else.