Strike point in the Model Contract

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Aug 6th, 2022
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How to strike point in the Model Contract

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In this video tutorial, Kelly OG discusses how to find the perfect options contract and strike price, addressing a common concern among traders. She emphasizes the importance of gaining the skills to independently select strike prices rather than relying solely on copying others in a trading group. Kelly aims to empower viewers with the knowledge needed to confidently choose strike prices themselves, ensuring they can trade effectively even without external guidance or memberships. The tutorial focuses on making the process of selecting the right options straightforward and understandable.

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The strike price, also known as the exercise price, is the predetermined price at which a specific security may be purchased (for a call option) or sold (for a put option) by the option holder until the expiration date of the options contract.
How to pick the right strike price Identify the market you want to trade. Decide on your options strategy. Consider your risk profile. Take the time to carry out analysis. Work out the value of your option and pick your strike price. Open an account and place your trade.
Example 2: Put Option In another scenario, if a stock is trading at Rs. 70, and an investor has a put option with a strike price of Rs. 60. Here, the market price being higher than the strike price renders this put option OTM.
For put options, the strike price is the price at which shares can be sold. For instance, one XYZ 50 call option would grant the owner the right to buy 100 shares of XYZ stock at $50, regardless of what the current market price is.
Strike Options are a straightforward way to predict where prices will be above the strike price at a certain time.
An example of selling a call option XYZ is trading for $50 a share. Calls with a strike price of $50 can be sold for a $5 premium and expire in six months. In total, one call contract sells for $500 ($5 premium x 100 shares). The graph below shows the sellers payoff on the call with the stock at various prices.
The strike price of an option is the price at which a put or call option can be exercised. A relatively conservative investor might opt for a call option strike price at or below the stock price, while a trader with a high tolerance for risk may prefer a strike price above the stock price.
Say that a stock is trading at $100 per share. The $110-strike call option would give the holder the right to buy the stock at $110 on or before the date when the contract expires.

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