Don't know how to choose options? Watch one video to understand!

Here are the key highlights from the video. For more knowledge and operational guidance, please study the video in detail!

Trading options involves three main steps: first select the underlying stock, choose the options, and then proceed with the trade.

What kind of stocks should be chosen as the symbol for options?

Different stocks involve different risks, and the same goes for options.

For example, star stocks with higher liquidity will have relatively lower liquidity risk in corresponding options, leading to narrower bid-ask spreads.

No matter what options contract it is, you need to carefully consider the trend of the underlying stock before making decisions.

How to choose the direction and strategy of options?

Usually, before trading a stock option, simply ask yourself a question: How do you think this stock will perform in the short term future?

For example, nvidia has already risen a lot, do you think it will continue to rise in the short term, or start to move sideways? This is the most important factor in deciding on any options trade.

If you think it will rise, you can choose to long a call (buying a call option) or sell a put (short a put option).

If you think it will fall, then choose to long a put (buying a put option) or sell a call (short a call option).

04:22 How to choose the expiration date of options?

The choice of how long the options expiration date should be depends on your risk preference and investment goals.

Options prices become cheaper as the expiration date approaches, and more expensive the further out it is. This is because an option's value comprises intrinsic value and time value, with time value decreasing gradually as time passes.

Typically, options closer to expiration date experience larger price fluctuations, hence higher risks. Options expiring on the same day are known as same-day options, sensitive to changes in the underlying stock price, often leading to significant price surges or plunges.

At 07:47, how to choose the strike price of options?

If you have a lower risk preference, you can choose an at-the-money option (Options) with a price close to the underlying stock price, or an in-the-money option below the current stock price.

If you are willing to take on more risk for higher potential returns, you can consider out-of-the-money options, which have lower buying costs and higher potential returns, but also represent higher risks.

Finally, also remind everyone that if you do not understand Cantonese, you can click on the settings button in the bottom right corner after playing the video in full screen, choose subtitle translation, and switch to simplified Chinese subtitles for assistance in understanding~