To select the right strike price, consider your risk tolerance. If you like higher risk, choose out-of-the-money (OTM) options. For moderate moves, pick at-the-money (ATM) or in-the-money (ITM) options.
Think about how much you expect the stock price to move. For big moves, OTM options are good. For smaller moves, ATM or ITM options are better.
Consider how long you plan to hold the option. Longer-term options are safer but cost more. Short-term options are cheaper but riskier.
Look at market volatility. In a volatile market, ITM options might be safer.
For strategies:
-
Buying calls/puts: Easy but needs a big move in the stock price.
-
Spreads: Combine options to limit risk and cost. A bull call spread is one example.
-
Straddles/strangles: Good for volatile markets. Buy both a call and a put.
Start with buying calls or puts and try more complex strategies as you learn.
| Subscribe To Our Free Newsletter |
