‎How to Be a Options Trading King (2024)

FAQs

What is the trick for option trading? ›

Avoid options with low liquidity; verify volume at specific strike prices. calls grant the right to buy, while puts grant the right to sell an asset before expiration. Utilise different strategies based on market conditions; explore various options trading approaches.

As the name suggests, the 1–1–2 options strategy consists of three distinct options positions: One long put. One short put. Two additional short puts.

The best strategy for option trading is to thoroughly research and understand the underlying assets, assess market conditions, employ risk management techniques, and consider using a combination of strategies such as covered calls, protective puts, and spreads to mitigate risks and maximize potential profits.

The option sellers stand a greater risk of losses when there is heavy movement in the market. So, if you have sold options, then always try to hedge your position to avoid such losses. For example, if you have sold at the money calls/puts, then try to buy far out of the money calls/puts to hedge your position.

But, unlike teen patti, options trading is not just based on luck. With the right knowledge and understanding of the market, you can make informed decisions that can lead to big profits. So, if you're willing to put in the time and effort to learn about options trading, you can definitely do it.

A Bull Call Spread is made by purchasing one call option and concurrently selling another call option with a lower cost and a higher strike price, both of which have the same expiration date. Furthermore, this is considered the best option selling strategy.

Selling cash-secured puts is considered the safest strategy because it has defined risk and income potential. The maximum possible loss is capped at keeping the cash deposited until expiration.

Some basic strategies using options, however, can help a novice investor protect their downside and hedge market risk. Here we look at four such strategies: long calls, long puts, covered calls, protective puts, and straddles.

What is the most risky option strategy? ›

Selling call options on a stock that is not owned is the riskiest option strategy. This is also known as writing a naked call and selling an uncovered call.

A Bull Call Spread is made by purchasing one call option and concurrently selling another call option with a lower cost and a higher strike price, both of which have the same expiration date. Furthermore, this is considered the best option selling strategy.

Many professional traders trade actively in the first hour or two of trading and take the middle of the day off. This is the best time of the day for trading options for experienced and skillful traders. They may come back for the last hour or two of trading.