1.
Decide what kind of trade you wish to take- Intraday,
Swing or Positional
2.
Using a strategy- Price Action, Demand Supply or
Support Resistance to determine the movement of the stock for that period.
3.
Identify the target and stop loss on this
technical chart- the stock or the index, and not the Option Premium chart.
4.
Then after having an idea of the Target and SL,
one chooses the option strategy to implement and execute.
This way you never have to bother about where to place your
SL as unlike the stock or index, an option premium decays as per variables-
time to expiry and market sentiments.
Trading in Futures:
Suppose the strike price you have transacted is 16,700.
Case 1: You have Bought
If at the expiry, the market stays above 16,700, then you have profit in futures.
If at the expiry, the market stays below 16,700, then you have loss in futures.
If at the expiry, the market stays around 16,700, then you have no profit no loss or slight loss in futures.
Case 2: You have sold
If at the expiry, the market stays above 16,700, then you have loss in futures.
If at the expiry, the market stays below 16,700, then you have profit in futures.
If at the expiry, the market stays around 16,700, then you have no profit no loss or slight loss in futures.
**Under development