7 Mistakes Newbie Options traders make on Expiry Day! Trade Brains

7 Mistakes Newbie Options traders make on Expiry Day! Here are the seven mistakes newbie options traders make on expiry day that they should try to avoid to reduce the losses while trading in options: 1) Choosing the wrong Strike Price Many newbie trades buy extreme OTM call/put positions on expiry just because their premiums are cheaper. However, the decay is also fast on the day of the expiry and the Out of the Money (OTM) contracts will become worthless at the end of that trading day. It would be advisable to trade in ITM or ATM strike prices on expiry days for options buying. 2) Poor Risk Management Just because the premiums are lower on the expiry day, Say Rs 40/50, newbie investors tend to buy high lot sizes of contracts in the hope to make higher profits. However, the risk involved in also higher with bigger lot sizes. 3) Zero to Hero Trades Many Options trading Channels/Telegram channels glorify on how an option of Rs 30 becomes Rs 300 at the day of expiry. However, for beginners to spot and make a profit from such trades is very rare. A big mistake here is that many newbies tend to use high capital for Zero to Hero trades, which can turn out to be a very unprofitable approach as such trades can also become Zero on the day of expiry. Use only a small portion of profits on Zero to Hero trades 4) Gut-Based Trading Options traders tend to make a lot of money on Expiry days if their views are correct. However, most experienced trades know when to cut their losses if the trades are not going as planned or according to their setup. However, many beginners take gut-based trades on expiry day, hold to the wrong positions even when they are going against what’s planned, and eventually turn up to be Zero. Avoid gut-based trading and use a proper approach. 5) Revenge Trading When it’s not your day, no matter how good a trader you’re, you won’t make money on that day because your psychology gets affected. Experienced trades understand this, however, for newbies, it’s very difficult to accept how they lost money, especially on the day of expiry. They start over-trading or revenge trading, which eventually turns out into even bigger losses. 6) Lack of Patience On the day of expiry, if you have implemented any strategies like straddle or strangle, it can give you returns. However, you’ll require patience and it is not essential that the strategy will give you result in 15 mins or so. Buyers tend to be afraid of the decay and sellers tend to become afraid of the volatility. However, to win the game, traders need to stay in the game. 7) Options Buying vs selling If the market is directional, buying can make good profits and if the expiry is range bound, selling can be highly profitable. Traders need to identify the market and choose their strategy accordingly. You cannot make profits on expiry using the same strategies all the time and you have to pick between buying and selling. Disclosures and Disclaimer: Investment in securities markets are subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in this video are for educational purposes and should not be construed as investment advice by Trade Brains. Investors should consult their investment advisor before making any investment decision. Tags: option trading, option trading mistakes, share market, stock market, stock market for beginners, options trading for beginners, option trading strategies, options trading live, trading, intraday, intraday miskates, share trading, stocks, shares, trade, how to do option trading, how to make money, make money in share market, money, options, ce, pe, nifty, bank nifty, bank nifty option trading, trading strategy, futures