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Options Trading for Beginners (Part 2): Risk management, and avoiding common pitfalls
Options Trading for Beginners (Part 2): Risk management, and avoiding common pitfalls

Options Trading for Beginners (Part 2): Risk management, and avoiding common pitfalls

In Part 1, we explored the foundational concepts of options trading and highlighted some common pitfalls to avoid. Now, let's delve into some basic concept of risk management techniques, and how to avoid mistakes.

Praveenkumar Yadav Article rating: 3.9

In Part 1, we explored the foundational concepts of options trading and highlighted some common pitfalls to avoid. Now, let's delve into some basic concepts of risk management techniques, and how to avoid mistakes.

Solving the puzzle for setting a stop loss for an option trade!
Solving the puzzle for setting a stop loss for an option trade!

Solving the puzzle for setting a stop loss for an option trade!

Options are time-sensitive, and their value erodes with each passing day due to time decay. Placing stop-loss orders on a closing basis could result in more significant losses.

Karan Dsij Article rating: 3.9

Determining the appropriate stop loss level in options trading can be a complex and critical aspect that traders need to solve or figure out.

Must-Know for New Derivative Traders: Do Out-of-the-Money (OTM) Options Really Expire Worthless?
Must-Know for New Derivative Traders: Do Out-of-the-Money (OTM) Options Really Expire Worthless?

Must-Know for New Derivative Traders: Do Out-of-the-Money (OTM) Options Really Expire Worthless?

What happens on the expiry day to OTM Options? 

Karan Dsij Article rating: 3.7

Of course, you may notice an apparent value of Rs 0.05 for OTM options close to expiry, known as the Last Traded Price (LTP). However, it's crucial to distinguish LTP from the actual value of the option on expiry.

 

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