Struggling with picking the right strike price for options trading?
When it comes to choosing the perfect strike price, many traders wonder: what's the best strike to go for? Well, here's my secret: I always aim for either at the money or just one strike out of the money, and make the distinction between the two based on which was more volume 🎯💸
When it comes to strike selection, it's all about finding that balance between risk and reward. Opting for an at-the-money strike gives you a higher probability of profit if the stock moves in your favor while offering plenty of explosiveness, and the Greeks are working against you as aggressively as they would be in an out-of-the-money contract.
I always hear newer traders say “These contracts are cheap” when talking about OTM contracts 🤣 Choosing an out-of-the-money strike might seem tempting with its lower cost, but remember, it also comes with a higher risk of the option expiring worthless… These options are cheap for a reason and you’ll more than likely get bagged in those plays over the long-term.
Remember, finding the right strike price is just one piece of the options puzzle.
