🗓️ Last Updated: 03 May 2026
Ardan Kumar | AKTV | Trading Education | 9 min read
Read in Hindi: Option Buying के 5 Rules जो आपको Loss से बचाएंगे
Table of Contents
Option buying looks like magic to most new traders. Put in a small amount and double it overnight. As exciting as that sounds, the reality is brutal. Data shows that over 90% of option buyers end up losing their capital.
But does that mean you cannot make money buying options? You absolutely can. The difference is that professionals treat it like a business and beginners treat it like gambling. Today I am sharing the 5 golden rules that will change your trading journey for good.
If you want to understand the right entry time for options trading first, read this: How to Trade Nifty 50 and SENSEX Options Like a Sniper
Rule 1: Strike Selection: The Delta Secret
Your win or loss is decided before you even enter the trade depending on which strike you pick. Most people buy OTM (Out of the Money) options because the premium looks cheap. That is the biggest mistake. The entire game here is about Delta.
Delta tells you how much your premium will move if Nifty moves 100 points.
Example (Nifty @ 24,000):
The Amateur Choice: You buy the ₹23,700 PUT (OTM) at a premium of ₹30. Its delta is just 0.20. If Nifty falls 100 points you make only ₹20 profit.
The Professional Choice: You buy the ₹24,200 PUT (ITM) at a premium of ₹220. Its delta is 0.80. Here a 100 point fall in Nifty gives you ₹80 profit.
| Strike Type | Strike Price | Delta | Premium Move (100pt Nifty) |
|---|---|---|---|
| OTM | ₹23,700 | 0.20 | + ₹20 |
| ATM | ₹24,000 | 0.50 | + ₹50 |
| ITM | ₹24,200 | 0.85 | + ₹85 |
Pro Tip
Pro Tip: Always trade 3 to 4 strikes deep inside (Deep ITM) where delta is between 0.75 and 0.90. Even a small move in your favour will push the premium up sharply.
Rule 2: Trend Riding: Price Action is King
Markets never move in a straight line. If you are buying option calls on every green candle and puts on every red candle you are already caught in the overtrading trap. All you need to understand is market structure.
Example: Suppose Nifty is in a downtrend, forming Lower Highs and Lower Lows consistently. Nifty falls from 24,050 to 24,000. It recovers slightly to 24,030 forming a new Lower High. The moment it breaks 24,000 again that is your perfect entry.
As long as the market does not break the previous swing high the trend is with you. Drop the fancy indicators and learn to read the chart.
To understand Price Action and Smart Money concepts in depth, read this: Smart Money Concepts: FVG, Order Block and Reaction Block Explained
Rule 3: Strict Stop Loss: The Hope Trap
Your biggest enemy in trading is hope. “It will bounce from here.” “Let me wait a little longer.” These are the thoughts that empty accounts.
The Rule: No trade without a stop loss. If your analysis was wrong, accept it and get out.
Practical Hack: If you are trading 2 lots, book the first lot at 40 to 50 points profit. This brings your risk to zero and you can trail the second lot for a bigger target. Remember, the market does not care about your ego. It only rewards discipline.
Want to take risk management seriously? Read this: Risk Management in Trading: Why Most Traders Blow Their Account
Rule 4: No Overtrading: The 2 Trade Rule
Most traders do not lose money to the market. They lose it to brokerage. Every extra trade taken to recover a loss is called Revenge Trading and it almost always makes things worse.
Trader A: Takes 2 well planned trades for the day. One profit, one loss. Goes home with a small gain or small loss.
Trader B: Takes 10 trades trying to recover the loss. By evening the account is down 20% plus ₹2,000 in brokerage.
Make a commitment to yourself. Only 2 trades per day. If the setup forms, trade it. If not, close the screen. Preserving capital is as valuable as making profits.
To understand the psychology behind overtrading and where you stand in your journey, read this: 5 Stages of a Trader: Where Are You Right Now?
Rule 5: Theta Awareness: The Silent Killer of Option Buying
The biggest risk for an option buyer is Time Decay or Theta. As time passes the option premium keeps shrinking even if the market does not move at all.
Expiry Day Example: Suppose today is expiry. You buy the 24,000 Call at ₹40. For the next 2 hours the market stays completely sideways. Not a single point down. But your premium drops from ₹40 to ₹15. Why? Because Theta is the option buyer’s enemy.
Golden Window: The best time to buy options is 3 to 5 days before expiry. Theta decays slowly at that point and ITM options move in a very stable, predictable way. Do not chase Hero to Zero trades on expiry day and risk your hard earned capital.
Want to learn more about expiry day trading? Read this: Gamma Blast: How ₹10 Becomes ₹110 on Expiry Day
Conclusion
Greed and fear are the two things that destroy option buyers. If you follow these 5 rules consistently over the next 10 trading days you will see a clear improvement in your win rate.
Trading is a marathon not a sprint. Only those with discipline survive long enough to profit from it.
And if you want an algorithm to find the right entry time in option buying for you, try AKTV Sniper which gives real time options signals for NIFTY and SENSEX. Completely free, no login needed.
Read in Hindi: Option Buying के 5 Rules जो आपको Loss से बचाएंगे
Watch a video on this topic: Click Here
Also read: Fair Value Gap; Order Block and Reaction Block
Also read: Fake Breakout: How the Stock Market Traps Retail Traders
Also read: Risk Management in Trading
Disclaimer: Trading in options involves significant risk. This article is for educational purposes only. AKTV is not SEBI registered. Do your own research before placing any trade.
Written by: Ardan Kumar | Founder | aktv.in
About the Author
Ardan Kumar
Ardan Kumar is the founder of AKTV, a free trading education platform for Indian retail traders. He served 8 years in the Indian Air Force as an Aircraft Maintenance Engineer, working on Mi-17 helicopters and earning special service medals for Operation Rhino in the Mizo and Naga Hills. After leaving the Force, he entered the stock market, learned trading the hard way, and built AKTV to teach others what took him years to figure out. He holds an MBA in Marketing and Finance from CRSU Jind where he topped the course, and has cleared UGC-NET in Management. He is also the co-founder of One Percent Capital LLC, Texas, USA. His YouTube channel AKTV Business has over 27,000 subscribers. Everything on AKTV is free: no login, no payment, no hidden charges.