Comparison of #Nifty & 10000 CE
When Nifty created a higher low from 7511 to 8055 then you can see even after 500 points rally, 10000 CE price dropped from 87 to 16 (81% drop), that shows clearly that everytime is not a option buying time.
After that when Nifty moved up from 8055 to 9131 then after 1100 points rally 10000 CE price appreciated upto 97 that is roughly 10 points higher than the price when nifty was trading near 7511 level on 25th March,2020
In layman terms, Nifty rallied 7511 to 9131, that is great up-move of 1600+ points in a few days and Nifty 10000 CE appreciated by 10 points only!
There are many people who are highly interested to buy far money CE or PE with an expectation of 10x or 20x return in short span of time, ultimately they end up with losing their hard earned money. We must accept that stock market is well prepared with their instruments.
We shall look into the time when the options are offered to buy or sell, if uncertainty is higher then you have you pay extra premium to buy the option, so only blind betting won't help in long run to create wealth. Volatility plays a vital role in calculation of premium.
Delta, Theta, Gamma, Vega are variable in nature and a retail trader who normally buy an option, can't track or use them properly. So, an option buyer shall understand the time when he is buying option, if uncertainty is higher, then very less chance is there to make profit.
• Fix Your Loss: How much loss you can afford? Fix that amount and trade with that much amount of risk. Risk reward ratio shall be calculated.
• Be Ready to Book Loss: Once stop loss is triggered, exit. Because you know that in next few trades you'll make much more than the previous loss. Be happy when market makers beat you.
• Follow a Proven Technique: Trade with a technique that works with 50% accuracy or higher. Most of the professional traders are happy with only that much accuracy, retail traders are searching for a sure-fire means of beating the market.