Avoid blindly buying call options at the bottom of the market, when trading options, you should learn to judge whether the option** is overvalued, and avoid blindly buying call options at the bottom of the market. In addition, it is important to correctly choose whether to sell an option based on the current volatility level.
Theoretically, when the market is in a strongly bullish state and extreme volatility is expected, you can consider buying a call option; When the market is in a mildly bearish state, thinking that the market is under great pressure, but the speed is not too fast, you can consider selling call options; When the market is in a strongly bearish state and volatility is expected to increase significantly, you can consider buying put options; When the market is mildly bullish and the support below the market is considered strong, but it cannot be unfolded for specific reasons**, you can consider selling a put option.
Don't buy put options at market highs either. You should learn to judge the ** of options, which requires analyzing the volatility of options. When volatility rises, the value of both put and call options rises.
Finishing**: Options sauce.
Advantages of call options
1.Right but not liability
Buying a call option only requires a certain premium to obtain the right to purchase the underlying asset at a fixed **, but does not assume other obligations. As a result, your losses are limited to the premium paid, while the potential gain depends on the magnitude of the underlying asset, which is theoretically unlimited.
2.Leverage
Unlike ***, there is no margin required to buy a call option, only a premium is required (usually much less than ***), which expands the leverage of the trade and retains the opportunity to make a profit.
**Conditions apply to call options
1.Purchased when the underlying asset is expected to be larger
Implied volatility increases only when the underlying asset is larger, so that the proceeds from the call option can cover the premiums paid and the losses from the decline in time value.
2.Buy when implied volatility is low
Unless the underlying asset is consistently substantial, it is not advisable to buy a call option when implied volatility is high. Because once the underlying asset is unable to continue to be substantial, a decline in implied volatility and a decline in time value can lead to a significant increase in the call option, resulting in losses.
**Specific use of call options
1.Select the appropriate option contract month
Based on your judgment of the increase in the underlying asset**, choose a short-term or medium-term option contract. If you expect the near future, select the near options contract; If you think that *** will occur in the medium to long term, then choose the medium and long term option contract.
2.Select the appropriate exercise**
The choice of exercise** depends mainly on how well you control the increase in the underlying asset. If the expected increase is larger, you can choose a more out-of-the-money call option, because even if the delta of the out-of-the-money option is small, when the underlying asset **gradually approaches or exceeds the exercise of the out-of-the-money option**, the gamma will gradually amplify, accelerating the amplitude of the option**. On the other hand, if the expected increase is limited, you should choose a call option that is biased towards the real money, or even consider abandoning the call option (other factors need to be analyzed).
3.Time selection
The timing of buying a call option needs to be flexible and changeable, and the specific problem needs to be analyzed on a case-by-case basis. Taking the above factors into consideration, choosing the best time to buy a call option can be expected to obtain unexpected returns. At the same time, caution should be exercised in buying call options with a short time to expiration, as their time value decays quickly.
If the above conditions are not well understood, and the timing of the call option is not accurately grasped, the purchase of the call option may become worthless. Options