Options is Gambling or Not?
OTM options may look cheap with an absolute price perspective but it is mostly not what it looks like. Implied volatility of an OTM Put option will almost always be higher than the ATM which means buying OTM puts are expensive. Buying Options helps traders participate in the stock market moves at an extremely low capital requirement. For instance, to participate in a bullish view on Nifty for the weekly option with ATM strike will today cost as low as Rs 9,750 (Strike: 14900, Premium: 130.7, Lot size: 75), that’s not even 5 digits. This attracts lots of retail investors to participate in buying option strategies and to further reduce costs. Very often they resort to buying Out of the Money (OTM) options which are generally extremely low premium, even though buying an OTM option still lets you participate in the view but the payoff may not be practically lucrative. {"uid":0.3576500607714479,"hostPeerName":"https:/...