InvestorQ : Can I effectively use options to trade around key events like budgets and policies?
Niraja Mehta made post

Can I effectively use options to trade around key events like budgets and policies?

Answer
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Mary Joseph answered.
2 years ago


Can you consider option premium as a sunk cost and take a risk on a stock. Don’t do that always. Do it only if you have a strong view around key events like earnings announcements, macro announcements etc. In such events, it is worth taking that kind of risk! Use short stop losses and book losses faster. Many traders do wonder why you require stop losses in call options. After all, when you buy call options your risk is anyways limited to the premium paid. Why to lose even the premium if you can salvage part of your cost? If you bought Nifty 10200 call options at Rs.85 and if the trend is working against, as well book loss at Rs.45 rather than waiting for the value to go to 0.