Firstly, I conduct thorough research on the underlying asset...

Firstly, I conduct thorough research on the underlying asset and analyze its price movements. I track historical price patterns to get an understanding of its volatility and the potential price movement over time. This knowledge enables me to make an informed decision on which strike price to pick that aligns with my investment objectives.
Secondly, I pay attention to the market conditions and how they impact the asset's price. Market volatility plays a significant role in determining the strike price. Higher volatility levels generally translate into higher option premiums, which affect the cost of purchasing the option contract.
Thirdly, I balance the potential profit and risk while selecting the strike price. While picking the contracts, I evaluate the potential for the underlying asset to reach the strike price within the expiration period. I also evaluate the risk involved in the trade against the potential returns.
Despite following these strategies, mistakes can still occur. One of the most common mistakes I have made is choosing the wrong expiry date for the option contract. In such cases, I have learned to evaluate my investment strategy regularly and made adjustments accordingly. I also keep track of my investment performance and evaluate the effectiveness of my strike price selection criteria.
In conclusion, selecting the right strike price requires research and careful consideration. I have learned from my mistakes and developed a strategy that factors in both potential profit and risk while selecting strike prices.