Selecting Right Strike Price to Become Winner in Option Trading

Choosing the correct strike price when trading options is just as essential as the knowing direction of the market. The right strike price can mean the difference between trading success and trading failure. The more often you pick the right strike prices, the higher your odds of success over the long term will be.

High delta for quick market moves:

Buying closer-to-the-money options gives you a higher delta, which means your options will respond to every rupee movement of underlying stock sooner and stronger. Likewise, buying at-the-money options (or options that are lower/higher than the actual stock prices) reduces your risk that the stock has to make a small move for your options to be in-the-money.

Can you guess both the direction and timing?

As an option buyer you have to not only predict the direction of the market (put/call) but also the magnitude of the move. How fast will the market get to your target? Will it take 3 months or 6 months?
In the world of options trading just 1 day can make the difference between profits and losses. If you buy an option at the strike that you think the underlying security will move to, you’re likely to lose money because you paid premium for the options time value. If you are right about the direction but dead wrong about the timing – you lose.
Deep OTM options are like lottery tickets: Deep-out-of-the-money strikes appear attractive for the “novice” options trader because of the low absolute rupee value of the options. But remember that these options have a low rupee because it’s highly unlikely they’ll ever be in-the-money.