Most of the option traders biggest mistake is failing to check the perfect fair value of the Option before it is bought or sold.Some times it may seem like a nuisance, especially trader or broker don't have real time evaluation capacity, but this is the basis of all strategic investments.Before entering you need to know whether you are getting a bargain or paying extra premium too much for the option trade.
Traders who are new to Options segment prefer to buy calls and puts because of their limited potential risk and high rewardable profits.Always buy In-the money call instead of buying underlying instrument.
Why because, it moves point for point with the underlying stock option or index option contract.Furthermore,the option price includes only a very small amount of time value premium ie., wasting part of the option.Finally,it should be a perfect bet for less risk and more profitable reward.
There are strategic option opportunities in all Segments -- Stocks and indices.The same principle and strategy of option evaluation needed to construct a statistically attractive.Sometimes,there are often inter- market hedging that are very reliable, but in order to take advantage of them, one has to trade all the segments of the markets.
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