Options is a financial derivative instrument that gives traders the right to purchase or sell an underlying asset at a predetermined price. You can leverage options for intraday to gain additional flexibility and potential for profit.
In options intraday trading, positions are opened and closed on the same trading day to capitalize on price fluctuations. In this, you can engage in several trades and complete them within the same day to earn profits.
However, to ensure optimal trading, it is important to be familiar with tips and tricks related to intraday option trading strategies which we will see in this article.
As options with higher liquidity tend to have a narrower bid-ask spread, focus on options with higher liquidity. This minimizes slippage during intraday trading and also ensures better execution prices.
2. Opt for Short-term Expiry Options
You should always opt for options with short-term expiration dates, such as weekly or near-month options. You can capture price movements within a compressed price range in short-term expiries.
3. Understand Intraday Market Trends
Analyzing the intraday market trends is extremely important before initiating any trade for an options trader. You need to know the premium, expiry date, option Greeks, volatility, etc.
To guide your trading decisions precisely, you can identify patterns and potential support and resistance using pre-built option strategies available on platforms like Dhan.
On your option trading platform, you can choose from various technical analysis tools such as moving averages, Bollinger bands, and relative strength index. These tools can help you find potential entry and exit points for your options trade.
5. Focus on High-volume Underlying Asset
Remember to trade options on underlying assets that have higher trading volume. The underlying assets having higher volume reduce the risk of unexpected price gaps and tend to have more accurate price discovery.
You can consider using options spread such as vertical spread, butterflies, or condors instead of trading single options. Using these strategies, you can unlock higher potential returns, minimizing risks simultaneously.
Trading options requires a lot of practice and learning to achieve growth. Novice traders can use paper trading or virtual trading platforms to test their strategies before exposing capital to risk.
Options prices are regularly impacted by market-moving news and events. You should always stay informed about relevant events or news and make trading plans accordingly.
Traders seeking quick profits within a single trading session can use options intraday trading. Intraday trading in options offers a great avenue for such traders. On the other hand, the dynamic nature of intraday trading also requires meticulous planning, discipline, and an effective approach.
You can achieve consistent profitability by staying disciplined and implementing a defined plan with continuous practice. Use an options trading platform like Dhan to avail of the best-in-class tools and options app for a smooth intraday trading experience.