Options trading attracts most beginners. It allows traders to bet on the asset movement without risking huge capital. One of the appealing strategies to trade options is Expiry Day Option selling.
If you are new to the world of options trading, you can get insights into this strategy and learn how to benefit from this options trading approach.
The Basics of Options
Options contracts are derivatives as their value depends on the underlying assets like stocks, bonds, indexes, commodities, currencies, mutual funds, etc. An options holder has the right (not obligation) to buy or sell the underlying asset at the predetermined price (strike price) within the stipulated duration.
Talking about the expiration, an option can have a short-term or long-term expiry. You can exercise the option on or before expiration or let it expire worthless. As the options contract reaches its expiry, it reduces its value.
Expiry day comes with additional volatility. It means more opportunities to trade but at a high risk.
Understanding the Expiry Day Option Selling Strategy
Expiry Day Option trading is a trading strategy executed on the expiry of the options contracts. It is a popular trading strategy to sell options and profit from time decay and volatility.
- Time decay or theta decay means the gradual reduction in the contract’s value as time passes. It does not matter if the underlying asset price remains the same or changes.
- Market unpredictability and volatility make Expiry Day Option Selling Strategy a high-rewarding and high-risk strategy.
How to Trade as a Beginner
The following are the crucial factors to consider when engaging in expiry day option selling to manage risk:
- Strike Price
The time value of the contract decreases with each passing time. Ensure that the strike price of the options contract is nearest to the current market price because you need to capture a reduction in premium due to time decay.
- Time of Trade
Since the strategy involves securing profit from the passage of time. Take an options trade at the beginning of the day.
- Setting Stop-loss Orders
Like other market segments, stop-loss orders can help you in risk management in options trading.
Many beginners consider reputed platforms providing Expiry Day Option Selling courses online to develop skills to navigate this complex trading strategy effectively.
Simplified with Expiry Day Option Selling Strategy Course
Like many beginners, you can consider renowned platforms offering option trading courses online at your convenience. It can benefit you in the following ways:
- In-depth Knowledge: With a structured options trading course, you can learn the basic concepts of options trading, the mechanics of expiry day option selling, and effective risk management techniques. Also, you can get more clarity with real-life case studies.
- Reduced Odds of Mistakes: You can understand the intricacies of expiry day option selling under the guidance of experienced instructors. It will help you make informed decisions and avoid common mistakes that most beginners make.
- Develop Skills: Develop risk management skills and learn to make necessary adjustments as the market fluctuates with the expert guide.
Affordable Expiry Day Option Selling Course
For an affordable expiry day option selling course, you can enrol in Upsurge Club, offering simplified stock trading education, guided by industry experts. Access the knowledge and tools needed to trade options and gain confidence.
The Conclusion
The expiry day option selling strategy can attract you due to its potential for consistent income generation. Also, this strategy carries lower risk than other options strategies. However, before delving into the strategy, understanding its intricacies is essential. Therefore, beginners consider the expiry day option selling courses, before venturing into this strategy. You can download the Dhan app offering an advanced trading platform for options trading.