We have already discussed about FUTURES AND OPTIONS in previous post.
Now in this post I am going to tell you about OPTIONS TRADING. I have already told you about FUTURES AND OPTIONS in brief so please check out that post, link is in last 3rd paragraph.
OPTIONS TRADING:-
• You heard about ITM, ATM AND OTM so let me give you more clarity about these.
ITM- It stands for In The Money, it's value is between 0.5 - 1. A call option is said to be ITM when market price is more than the strike price.
ATM- It stands for At The Money, it's value is about 0.5. A call or put option is said to be ATM when market price is equal to or near to the strike price.
OTM- It stands for Out The Money, it's value is between 0 - 0.5. A call option is said to be ITM when market price is less than the strike price.
★ Buyers have less chance to make profit than the sellers.
• You don't have to purchase all stocks, you can also purchase premium.
• ITM's premium is expensive and OTM's premium is cheap in CE
• When Price increases you can buy CE but, I suggest you to sell PE because as I have already told you that sellers have high chance to earn profit than sellers.
• When Price decreases you can buy PE but if you sell CE then you earn profits.
★ KEEP IT IN YOUR MIND THAT FUTURES AND OPTIONS HAVE CAPACITY TO GIVE YOU PROFIT FASTLY BUT IT CAN ALSO PUSHES YOU IN LOSS FASTLY THAT IT BECOMES HARDER FOR YOU TO RECOVER YOUR CAPITAL. SO PLEASE DON'T PLAY LIKE A GAMBLER, INVEST YOUR MONEY AFTER DOING THE PROPER RESEARCH ON IT AND ANALYSING THE CHART AND GRAPHS, BECAUSE 90% TRADERS LOSE THEIR 90% CAPITAL IN FIRST 90 DAYS.
If you have not visited our last post on Futures and options then click on this link or copy it and paste it on chrome
Link- https://commerceworldteam.blogspot.com/2024/04/futures-and-options-part-21.html
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