What Traders Should Consider Before Locking In a Position
Choosing the right strike price is one of the most important parts of an options trade. It defines your risk, your reward, and your probability of success. Yet many traders guess—or rely on gut instinct—when selecting one.
There’s a better way.
The strike price you choose should match your market outlook and your strategy. If you’re buying a call option, and you expect the stock to move quickly, you might go for an at-the-money or slightly in-the-money strike. These offer a higher chance of profitability, though they cost more upfront.
If you’re aiming for a cheaper contract and are okay with lower probability and higher reward, an out-of-the-money option might fit. Just know that the further out you go, the more the stock needs to move for your trade to work.
For option sellers, it’s the opposite. Many traders selling out-of-the-money puts or calls want the stock to stay away from the strike. That way, the contract expires worthless and they keep the premium. Choosing the right level means finding a balance between safety (probability) and reward (premium).
Here are a few key factors to guide your decision:
The right strike price isn’t about being perfect. It’s about placing trades that align with your setup, your outlook, and your plan.
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Inside the program, you’ll learn:
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