Today we will learn how to implement Option Trading Strategy using Option Chain data fetched with real-time Paytm Money WebSocket. For real-time data we will use Paytm Money Python Web Socket API. Follow the blog carefully to understand how the concept works.
What is Option?
An ‘option’ is a contract that permits (but does not force) an investor to purchase or trade instruments like securities, ETFs or index funds at a pre-decided rate after a specified period (expiry date). Selling and purchasing options are carried out in the options market. An option that permits you to acquire shares sometime in the future is known as a call option. On the other hand, an option that enables you to sell shares sometime in the future is known as a put option. And strike price is the pre-determined price at which the buyer and seller of an option agree on a contract, or exercise a valid and unexpired option.
How does an Option Trading Work?
When an investor buys or sells an option, they have the right to apply that option at any point before the date of expiration. Simply purchasing or selling an option doesn’t require one to actually exercise it at the expiration point or expiry date. This is why, options are considered ‘derivative securities’. In other words, the price of option is derived from the value of actual assets, securities, and other underlying instruments.
What is WebSocket?
WebSocket is bi-directional, full-duplex, stateful protocol that is used in the same scenario of real-time client-server communication. Unlike HTTP it starts from wss:// or ws://. In stateful protocol the connection between client and server will keep alive until it is terminated by either client or server.
Why use WebSocket?
- Real-time Application: In Real-time application when the data is needed as soon as it is updated at the server, and client should not query the server continuously. In WebSocket, data is continuously pushed or transmitted into the same connection which is already open, that is why WebSocket is faster than normal HTTP protocol and improves the application performance.
- Chat Application: Chat applications use WebSocket to establish the connection only once when the user comes online. It reuses the same WebSocket connection, for sending and receiving the message and for one-to-one message transfer.
- Gaming Application: In a Gaming application, it has to sync player data in real-time with server. This is also crucial in case of multi-player games.
Python Source Code
Conclusion
Finally if you have reached the end of this post (Earn Money with Option Chain Trading Strategy using Paytm Money and Python (WebSocket)). As a result you should now be able to use the python bot for virtual trading. It has the ability to update in real-time (every second) and improve our system. Now you can see how fast the update comes from the server. With this simple strategy can earn good money within short time if used at the right time. If you want to learn more about trading, programing then stay tune to tutlogic.com or follow my channel on youtube.com/@tutlogic.
