4 Things to Check Before Option Selling

• Mon, Oct 31, 2022
• One-minute read

4 Things to Check before Option Selling

1. Check Margin required. Check profit w.r.t bank interest rate profit to see weather it is profitable or not.
2. IV very important. Check out Average IV trend chart. While SELLING options IV should DROP not rise. Chance of loss even when call goes right. IV works like elastic. Cyclic. Both rise & fall.

• How to Check IV ?
  • 1 Month before what was IV, What was Max IV last month. Check IV now. If IV is declining then one can sell. eg: (Last Month High + Last Month Low)/2 > Current IV then buy.
• Avoid stock selling & buying, trade index.

3. Check Trend. When to buy & sell option ?
   • If you are sure of trend, either buy future or buy call ( if up ) buy put ( if down).
   • If you think market RANGE BOUND or wont go up/down RAPIDLY then SELL PUT.
   • Avoid selling options during volatility.
4. Expiry.
   • Don’t sell options farther than 5 to 7 days expiry.
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🏷️Tags : #Investments💷/Options-Trading🎛️ 📚Reference : BullTrack RT Youtube Channel