Category: Business

Best Option Trading Strategies For Beginners - KundkundTC While it is possible to trade naked options, i.e. single option trade, it is safer to hedge your positions and reduce your risk by trading with option strategies. Most of these strategies ensure that loss is limited and the probability of booking profit is higher. Strategies employed by traders are based on their views about the expected price movement in the underlying asset. Thus, option strategies can be for bullish, bearish, range bound / sideways/sluggish, and volatile price movements. Furthermore, to make it easy to understand, some important terms and facts are stated below: The strike closest to the underlying asset’s price is called the at-the-money (ATM) option. In case of Call Options, all strikes less than ATM are considered in-the-money (ITM) and all strikes above ATM are considered out-of-the-money (OTM). The reverse is true for Put Options; strikes less than ATM are OTM, while strikes higher than ATM are ITM. All strategies listed here require that each leg of the strategy should have the same expiry. Index Options generally have weekly and monthly expiry, while stock options only have monthly expiry. Whereas, futures of indices and stocks always have monthly expiry, usually on the last Thursday of the month. If that day is a holiday, then expiry is on the preceding trading day.