9 Rules of Options

1. Timing the entry of Options
   • Buy on First half of the month ( Price drastically goes low on second half ).
     • Monthly Expiry : Apply Buying strategy on 1-15th of Month.
     • Weekly Expiry : Apply Buying strategy on Thursday (Next Expiry), Friday & Monday.
   • Seller Sell on Second half of the month. ( Time decay fast, hence price goes down ).
     • Monthly Expiry : Apply Buying strategy on 15th-31th of Month.
     • Weekly Expiry : Apply Buying strategy on Tuesday, Wednesday & Thursday ( Same day Expiry)
     • Buy as early as possible. 9:30 am.
2. Type of the Options
   • While BUYING Prefer AT THE MONEY or Near Strike ATM not IN THE MONEY.
   • While SELLING Prefer OUT OF THE MONEY or Near Strike OTM ( Not far OTM )
3. Setting Target & Stoploss
   • For stock options, Stoploss should not be more than 30% of Premium.
   • For stock options, should be 50% to 100% of Premium.
4. Averaging
   • If sure one can average if goes down.
   • While buying, Averaging should be done with the then ATM not old strike price. note : When European market opens @ 11 O Clock usually market could be range bound or consolidate.
5. Lock your profits.
6. Minimum Investment ( don’t over invest)
7. Options in high volatility.
   • While buying Minimum time between entry & Exit. ( same day or 1 day)
   • Hedge. Buy ATM both call & put.
8. Choose underlying stock options.
   • High volume, Liquid.
   • Bid - Ask => Low. ( low spread )
9. Expiry day rule ( Only for stock options)
   • Last 3 days, especially on expiry day, use “OPEN HIGH LOW SCANNER”.
   • Open = High , you have to sell, buy put ATM, NearTM.
   • Open = Low, you have to buy, buy call ATM, NTM.

🏷️Tags : #Investments💷/Options-Trading🎛️ #🧔Sourabh-Gandhi 📚Reference :