π Trading in options involves understanding some key terms to make informed decisions. Let's break them down! A threadπ§΅#OptionsTrading
π Call Option: gives you the right to buy an asset at a predetermined price, like the token you pay to book a flat. If the asset price increases, so does the value of the call option.
πPut Option: It gives you the right to sell an asset at a predetermined price. If the asset price falls, the value of the put option increases Like the insurance that comes handy when you crash your car.
π² Strike Price: It's the agreed-upon price at which an option can be bought or sold. You choose from a range of strike prices for an options contract.
π Open Interest: is the total number of outstanding option contracts and shows how interested the market is in the asset. Use OI to identify support and resistance levels.
π PCR (Put-Call Ratio): indicates market sentiment. A PCR < 1 suggests a bullish trend, while a PCR > 1 indicates a bearish mood..
π― Max Pain: is the strike price where option buyers face the highest losses, aka are in βmax painβ. Use it to predict expiry level.
β° Expiry Date: Like with your meds, it's the date when an options contract becomes worthless.
Understanding these terms will help you navigate the options market better. Happy trading! #OptionsSimplified #FinancialLiteracy
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