When I pick strike prices, I check out market trends, volatility, and potential rewards using technical and fundamental analysis. But hey, I've had my fair share of slip-ups, especially when I didn't pay enough attention to how wild the market can get. Lesson learned: always do your homework and manage risks wisely. To balance making money and staying safe, I stick to stuff like adjusting position sizes, setting stop-loss orders, and spreading my bets around.
However, i feel that it is more important to stress that Option trading carries risks, including a limited time horizon, leverage amplifying gains and losses, and market volatility impacting prices. Additionally, liquidity challenges may arise, and market fluctuations can affect option values. Options trading complexity and assignment risk for sellers further add to the challenges. Hence, it is very very important to do enough research before trading options. Paper Trading helps if you are new to it. It is always better to test your strategy before learning things the hard way :))
Dappyyy : When should someone start considering to invest using options?
mr_cashcow : Well said! Stop loss is a must, have seen quite a lot of people lose money because they didn't set stop loss or it didn't trigger due to gapping![undefined [undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36)
小trader OP Dappyyy : I think it really depends on how much you understand options and your risk appetite. If you fully understand how it works and you are more risk loving, options can be a very good way to earn money.
小trader OP mr_cashcow : Yes… stop loss or having covered calls are very important. Always cover your backside :))