Certainly! Let’s delve into the details of selecting a strike price for options:

Risk Tolerance and Option Types:

In-the-Money (ITM) Call Option: Higher sensitivity to the stock price. Gains more if the stock price increases but also decreases more if the stock price falls.

Out-of-the-Money (OTM) Call Option: Riskier, especially near expiration. Often expires worthless.

Desired Risk-Reward Payoff: OTM calls cost less but have higher potential gains and a lower chance of success.

Market Outlook:

Bullish: Choose a call option strike price above the current market rate.

Bearish: Select a strike price below the market rate.

Strike Price Examples:

If the Nifty50 spot is trading at 16,200:

16,200 Call Option:

ATM (At-the-Money): Strikes close to the spot price.

OTM (Out-of-the-Money): Strikes above the spot price.

ITM (In-the-Money): Strikes below the spot price.

16,200 Put Option:

ATM: Strikes close to the spot price.

OTM: Strikes below the spot price.

ITM: Strikes above the spot price.

Risk and Reward Trade-Off:

ITM Calls: Less risky but costlier.

OTM Calls: Lower initial cost, higher potential gains, but riskier.

Remember: Fluctuations on expiry day are sharp and brutal.

Precision Matters:

Identify levels and assess whether the market respects them.

Predicting markets can be challenging, so proceed with caution!

Remember, strike price significantly impacts your option trade outcome. Assess your risk tolerance and desired payoff before making a decision. 📈📉

Trade Live with us whatsapp us on 81263 37161 or visit our website www.innovatorsandyou.com

Ajay Kumar


Ajay Kumar is an entrepreneur who started his career early at age of 16. He started his own company at age of 21, made it a success. He has the ability as excellent stock market analyst with technical knowledge of the subject; Ajay can help you save a lot of money which you give the market after making your losses. He is the only one who has made INNOVATORS AND YOU as the best and the fastest growing institute for stock market in ASIA. Ajay Kumar is an MBA Professional with vocational experience in financial analysis. He is Expert in proceeding placements and imparting workshops. Active orator in share markets, micro/macro economics and stock analysis. A wordsmith in writing articles. Certificate holder in various modules of top financial institutes. Proficient in providing knowledge of financial modeling, financial derivatives, financial markets, ratio analysis, corporate valuation, mutual fund and much more.

Leave a Reply

Your email address will not be published. Required fields are marked *