InvestorQ : Is there any holy grail tricks to trade index options
Ramesh made post

Is there any holy grail tricks to trade index options

Answer
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sara Kunju answered.
6 months ago


There is nothing like a holy grain to trade index options but what you can do is to follow some basic ideas to trade index options. Here are a few of them.

· Prefer to buy index options when the momentum is favouring you because this is not the place to be doing value fishing.

· Don’t get carried away by the low cost of deep OTM options. They are cheap because that is what they are worth.

· Don’t buy index options with the logic that you can only lose so much money. You trade options to make money not to lose money.

· Keep an eye on the implied volatility. Buy when IVs are low and sell when IVs are high. That is a strategy that rarely fails you.

· Avoid ITM options as they are akin to futures. Instead look for at the money or slightly OTM options on the indices.

These are some basic tips that can help you be profitable on index options.