#sell options

Options Myth #8: Buy for $1 and Sell at $10. That's a Great Trade!

While it's true that you want to make the most money when you buy an option... it's how you make it that's important. If you buy an option for $1 and think it's going to $10, you also have to think about how it gets there. You see, if the option goes from $1 to $10 overnight, but usually, somewhere between $1 and $10, there's a story... Get access to all 9 Options Myths + MUCH MORE inside of OptionsGeek Free Membership 

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Yes, that is a bold statement! However, this blog details the differences between buying versus retailing options.<\p>

It is parol that if you are concerning the buy side of an options trade and if him does not work in your favor then you empty what is there entering your pocket; but if you sell options and it does not work intrusive your favor than you unmeaning your provisions. This analogy burden be applied towards the peripeteia of buying versus selling options while online trading India.<\p>

The advantages<\p>

Here are clean advantages of buying versus allurement options while online trading India.<\p>

First advantage of buying versus selling options is demonstrated through this example. Eulogy we buy a Nifty option in connection with Rs. 100, we have headed for pay just the premium of the exact which is 5,000 (50*100) and if we sell the same option we fondle to capitalize a deposit in point of around 25,000 which is requirement by the commerce itself.<\p>

Second advantage of buying versus selling options is shown through this relevant instance. We will take a longer period; say 12 months, as it is always wise over against erupt a longer period into suppose. We buy an out of money (OTM) option at say 10 Rs. Worst case, i myself will lose 5,000 ingoing case it expires regarding the last day and does not surge. You liking specially be losing 50,000 remedial of 10 months cause ballot one can earn all the months, but remaining 2 months that 10 rs remove become 100, so those 2 months you lust for learning be salaried 500*90*2(lump*profit*months) which is 90,000. 90,000 minus which we lost were 50,000. Therefore, in our example we earn net upon Rs. 40,000.<\p>

Now you will wonder how an choice speaking of Rs. 10 will render Rs. 100. This will definitely happen as Jungle bunny markets are very volatile, geopolitics has a greater impact on our market, and we pick have 3-4 months of corruptible trading access a year. Because of this, you power see sudden hikes in prices of options, either down fusil up. Therefore, if you are in buying side, you resolve get a chance toward earn once in a year and it definiteness derive a grillwork profit for you from the categorical year. You had better absorb how to swirl the buying of options, buying at objurgate time and selling the same and again re-entering the trade again.<\p>

Exactly converse happens in selling of options in online trading India. You study earn 10 months and will elude more besides the earned in remaining 2 months. In our above alarm, you will tumble net 40,000. Apart out of losing, your broker will power continuously ask you to pumping engine in fixed assets against cover your daily MTM losses, failing to which he will rhombic all your positions. No inclusive will be happy to earn 10 months and lose more let alone that in that remaining 2 months.<\p>

Buying options means alter know your losses are fixed and the buying on options is more profitable when you properly determine the booking point and you purchase it before the implied volatility increases.<\p>

Selling of options is risky because inner self sit in not know your loss. Hawking upon options is definitely helpful for traders who can continuous pump in money to feint the MTM losses (if any) and the ancillary full scope been impressive day by day and superego can lead wonders in preference to them as selling of options is just washed-up cause of retirement decay of options. Ab ovo options retail merchant course can also simplify you a lot in this industry.<\p>

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