What are the common pitfalls and mistakes that a novice options trader should be aware of, apart from STT?
Some points to keep in mind:
- When trading Stock Options, first make sure if the strike price is liquid.
- Never place a market order for Stock Options.
- When dealing with Nifty options avoid strike price ending with 50’s
- For Nifty options do not trade options more than 100 points away from current Nifty value.
- If you have not timed your entry and exit , you could be 100% correct with the direction of market but still end up loosing money.
- There is more to it than what is visible on the surface when trading options, you need to have a complete presence of mind when trading options.
The 90% of the elite 10% that makes money from the markets, makes it from trading options and not stocks.
Thanks, these are very good points
How to set a limit price? I mean how to know how much is good? Suppose I want to go long in one of the stock option and it closed at 20 today. at what limit price should I put a buy order for tommorow?