Dear readers, today we want to ** a topic that has attracted the attention of investors - is it better to buy at par, real or out of value for options day trading?
However, in this seemingly simple choice, there are many questions worth pondering. This article will answer this question in detail from three aspects: the basic concept of options, trading strategies and investor mentality.
First of all, you should understand that there are three types of options contracts, in-the-money, at-the-money and out-of-the-money.
An in-the-money option is an option with a lower exercise than the current exercise of the underlying asset;
An at-the-money option is an option with an exercise equal to the current exercise of the underlying asset;
An out-of-the-money option is an option that is exercised higher than the current position of the underlying asset.
So, in options day trading, should we choose at-the-money, real or out-of-the-money? This needs to be decided according to the investor's own trading strategy and risk tolerance.
The biggest feature of at-the-money options is that it is the existence of interval real money contracts and out-of-the-money contracts, which means that no matter whether it is up or down, it has a space to go.
The upward trend can fluctuate towards the in-the-money option, and the downward can also have room for out-of-the-money contracts to hold, so whether it is a buyer or a seller player, the opportunity to make a profit and the risk of loss in at-the-money contracts are relatively balanced and equal.
But for those investors who are looking for stable income, in-the-money options may be a more sensible option. The intrinsic value of in-the-money options is higher, which means that investors can obtain certain returns by exercising the option even if the underlying asset has not changed much after the in-the-money option.
In addition, the time value of in-the-money options is low, and investors do not need to take excessive time value risk.
However, for those risk-taking, high-yield investors, out-of-the-money options may be more appealing.
Out-of-the-money options have a lower intrinsic value, or even zero, but a higher time value. This means that investors may obtain huge returns if the underlying asset changes greatly after the out-of-the-money option. Of course, this also means that investors need to take on more risk.
Brief summary:
The best volatility space of at-the-money options is moderate and the risk is moderate;
The leverage of in-the-money options is small, but the accuracy is high;
The leverage of out-of-the-money contracts is large, and once you buy in the right direction, you will get a large return, but if you buy the wrong direction for out-of-the-money contracts or even deep out-of-the-money contracts, they may be cleared to zero, resulting in investors losing nothing.
In short, in options day trading, no matter what type of contract to buy, investors should make choices according to their own trading strategies and risk tolerance, and in the process of investment, always maintain a calm and rational attitude, and constantly improve their investment skills, so as to succeed in this market full of opportunities and challenges.
Okay, the above is what contract to buy for options day trading? Flat? Real value? Or is it an imaginary value? Answers, I am an option gang, more options knowledge, option skills, **knowledge, **skills, all in [Option Gang], I wish you all a smooth transaction