What is Better,if we Expect Nifty or Bank Nifty to Open Gap up for next day.For Ex. If Nifty is at 16000,What Would U Suggest, Deep ITM,Deep OTM or ATM Options to Buy.Which is More Profitable.
2 Likes
First of all, buying naked options is extremely risky.
But,if we still want to buy it, then depending on the risk and reward expectations…we have to pick the strike
If it’s a very short duration scalp type trade…ITM or ATM option is preferable
If it’s a positional bet, OTM gives us minimal loss
All this said n done, buying with hedges like bull call spread are preferably the best as per my understanding
1 Like
Option buying is quite risky and the naked buying is like catching the falling knife . So, always go a hedging strategy which will definitely save you from sleepless night . If we talk about ITM , ATM OR , OTM OPTION , It all depends on your risk appetite . Before thinking that which is more profitable , start thinking that which can give more losses also . GOOD LUCK
1 Like
I was asking just for example if it is available at low strike price & 1lot.And i expect gap up tomorrow.Still not found answer from anybody.
I was asking just for example if it is available at low strike price & 1lot.And i expect gap up tomorrow.Still not found answer from anybodyy.
1 Like
Deep ITM. You will get near 1:1 movement against index.
But nobody can be sure about any outcome in market or life. So know how much you are willing to loose on this trade. Deeper the ITM more money to loose if trade goes against you.
1 Like
I don’t know about it,does deep ITM or OTM options have Volume problems or U can Exit anytime till expiry.
As a thumb rule deeper the ITM less the liquidity. OTM strikes near ITM are generally liquid. Deep OTMs depending on strike there could be more or less liquidity.
Check market depth of the options to see how liquidity is. You can also check the OI graph to find which strikes have more interest from buyers and sellers.