How to Choose an Options Strategy for Your Market View
A practical way to choose an options strategy: start from direction, size and timing, check implied volatility, pick defined or open risk, then size the position.
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A practical way to choose an options strategy: start from direction, size and timing, check implied volatility, pick defined or open risk, then size the position.
What long-dated options are, which contracts tend to offer them, how they differ from weekly options, their uses for hedging and long views, and the costs.
What support and resistance are, how traders identify them, why they sometimes hold, role reversal and false breakouts, and how to use levels for strikes and stops.
ITM, ATM and OTM options explained: what each means for call and put options, how premium and behaviour differ, and how moneyness affects strike choice.
What max pain is, how it is calculated with a worked example, the theory behind it, why the evidence and data make it unreliable, and how to use it with care.
How the jade lizard works, a worked example with no upside risk, the downside it keeps, how it compares with a short strangle, and when it fits.
A call option explained in plain language: what the buyer gets and the seller owes, a worked example with breakeven, outcomes at expiry, and before expiry.
A put option explained in plain language: the buyer's right to sell, a worked example with breakeven, the seller's obligation, puts as protection, and pitfalls.
How the iron butterfly works, a worked example with maximum loss and breakevens, why the attractive ratio comes with a lower chance of success, and management.
What lot size and contract value mean in futures and options, why exchanges revise lot sizes, how they affect margin and small accounts, and freeze quantity.
How to read an option payoff diagram: the axes, breakevens, maximum profit and loss, the expiry line versus today's line, examples, and what the chart leaves out.
The difference between volume and open interest in futures and options, how open interest changes, the four price and OI combinations, and their limits.