Options trading for beginners

Why trade options :-

1. Leverage: You can control a large amount of stock for a smaller investment than buying the stock outright.
2. Flexibility: You can profit from price movements in any direction (up or down).
3. Risk Management: You can use options to hedge your stock portfolio against losses.

Risks in Options Trading :-

1. Loss of Premium: If the stock price doesn’t move in the direction you anticipated, the option could expire worthless, and you would lose the premium you paid.
2. Time Decay: The value of an option decreases as it approaches its expiration date. This is called time decay.
3. Complexity: Options can be more complex than simply buying or selling stocks, especially when using advanced strategies.

Common Beginner Mistakes to Avoid :-

1. Ignoring the Expiration Date: Always be aware of how much time is left until the option expires.
2. Overleveraging: Don’t invest too much into options without understanding the potential risks.
3. Not Having a Plan: Before entering an options trade, know your exit strategy — when to sell or take a loss.

For beginners, start with simple strategies like buying calls or puts. Focus on understanding how options work, their risks, and how they fit into your overall investment strategy. Start small, and as you gain more experience, you can explore more advanced strategies like spreads and straddles.