Been trading for a few months now and keep seeing strike price mentioned everywhere. I think I understand the basics but not sure why everyone says it’s so important.
Does it really make that big of a difference in how trades turn out? Would help to know what I should be looking for when picking one.
Strike price is crucial for your trades. It determines if you profit at expiration. If you miss the mark, even if you predict the market direction correctly, you lose. Many traders get caught up on high payouts but overlook the odds. Higher payouts often mean a lower chance of winning. It’s smarter to choose strikes that have a better probability of success. Consistently winning 65% with smaller profits is better than aiming for those risky 30% payouts.
Choose a strike close to the current price for better odds. Far strikes lower your chances and payouts. Focus on achievable targets.
Strike price is your target at expiration. Choose wisely to avoid losses.
Strike price is your break-even point. The asset must reach this price by expiration or you’ll incur a loss. Think of it like a goal post; moving it closer gives you better odds.
Choose realistic strikes based on the asset’s typical movement. This approach improves your chances of making a profit.
Strike price is where you think the asset will be when your trade expires.
I learned this the hard way - kept picking strikes way too far from the current price. Lost five Apple trades in a row because I got greedy.
Now I pick strikes closer to the current price with better odds. Made 71% on gold yesterday just by being realistic about price movement.