Options Writing "In The Money" would look like the Profits are huge, people think as the time goes on, this whole premium will come down, this is not the case (Might be the case in rare situation when the volatility is high). Never do a paper trading in this scenario cos the actual buyers and sellers might be less compared to "Out of the Money"
When the market starts reacting against our bookings in above situation, this hit will be much higher and that can even take you to the end of trading.
Better to analyse the market well and play safe without going to In the Money calls and puts.
Profits seems to be limited when trading @ "Out of The Money" options, but the chance of winning is very higher there.
Small example of "Out of the Money" and "In the Money" is below.
Source of the below picture if from the NSE website: https://www1.nseindia.com/
Highlighted on Yellow on either sides are "In the Money" and the row very next to the yellow highlighted row is "At the Money" and the rows below/above them are "Out of the Money" options.
When the market starts reacting against our bookings in above situation, this hit will be much higher and that can even take you to the end of trading.
Better to analyse the market well and play safe without going to In the Money calls and puts.
Profits seems to be limited when trading @ "Out of The Money" options, but the chance of winning is very higher there.
Small example of "Out of the Money" and "In the Money" is below.
Source of the below picture if from the NSE website: https://www1.nseindia.com/
Highlighted on Yellow on either sides are "In the Money" and the row very next to the yellow highlighted row is "At the Money" and the rows below/above them are "Out of the Money" options.
