Key Things to Understand in Option Trading
1. Strike Price
The price at which you expect market to move.
2. Premium
The cost to buy the option.
3. Expiry
Options expire every week/month.
4. Time Decay (Theta)
Premium decreases as expiry comes closer.
5. Volatility (IV)
Higher IV → higher premium
Lower IV → lower premium
💡 How to Trade Options (Simple Rules)
✔ Rule 1: Check Market Trend
Trade only in the direction of trend.
✔ Rule 2: Use Option Chain
Identify:
Strong CE writing = resistance
Strong PE writing = support
✔ Rule 3: Use Volume + Price Action
Look for:
Breakouts
Retests
Momentum candles
✔ Rule 4: Manage Risk
Never risk more than:
2% per trade
1. Strike Price
The price at which you expect market to move.
2. Premium
The cost to buy the option.
3. Expiry
Options expire every week/month.
4. Time Decay (Theta)
Premium decreases as expiry comes closer.
5. Volatility (IV)
Higher IV → higher premium
Lower IV → lower premium
💡 How to Trade Options (Simple Rules)
✔ Rule 1: Check Market Trend
Trade only in the direction of trend.
✔ Rule 2: Use Option Chain
Identify:
Strong CE writing = resistance
Strong PE writing = support
✔ Rule 3: Use Volume + Price Action
Look for:
Breakouts
Retests
Momentum candles
✔ Rule 4: Manage Risk
Never risk more than:
2% per trade
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.