When an option buyer enters the market, he simply wants to identify the trend. In most cases, there are two reasons for this thought process. First, the option buyer wants to determine whether he should buy a call or a put option. Second, he wants to generate 5X or even 10X returns by deploying a very small capital. Take, for example, Nifty is trading at 18,100, and he has observed that the market has been moving in 500 points for the last 20 days. Thus, he wants to grab the opportunity and make a killing. He wants to know whether to buy the 18,000 put option or the 18,200 call option. With so many strikes available on the option chain, he is faced with one question, which strike should I buy?
Find The Edge
We must know where to look if we want to find the edge. In today’s article, we shall solve this challenge for the option buyer. First and foremost, only buy options which are underpriced, never ever buy an overpriced option, no matter what the t