Which is the best time frame for Options Trading?

Short Answer

Options Trading is a risky business and options traders have to look at various parameters before taking a trade. Choosing a time frame is one of the factors in options traders. Both option Buyer and Sellers use different time frames to trade. Let's see which time frame is most useful for options buying as well as selling.

Detailed Answer

What is Options Trading?

Options are a type of Derivatives instrument where the Buyer and Seller of an Options Contract come into a mutual agreement. Both the parties agree to exchange the underlying asset on a particular date and at a particular price. Both of them have a legal obligation to exchange the underlying on the date of expiry.

Options trading is a common practice by traders and investors. Options are used by traders to speculate, and investors use Options to hedge their portfolios. Options trading can be done in various different ways, and time frames. Let's discuss the best time frame for Options trading.

Before discussing the best time frame for options trading, let's divide it into two parts.

  • Options Buying
  • Options Selling

As Options buying and selling are very different from one another, they require different time frames. let's look at them one by one.

Best Time Frame for Options Buying:

Options buying is one of the two aspects of Options trading. Options buying is comparatively a more difficult place to earn money. This is due to the fact that Options Buyers fight against more than one odds. Which include Theta decay or Time Decay and the risk of their view going wrong. Due to this, the chances of making money for an option buyer is merely 33%. For this Option buyers trade in shorter time frames and scalp the short movements of the underlying. This prevents them from facing some major losses due to the time decay in options.

For scalping, the best time frame for Options Buying is 5 minutes to all the way up to 15 minutes. The 15-minute time frame is ideal to confirm the short-term trend and a lower time frame such as a 5-min time frame is ideal for an entry and exit. In shorter trades, exit is more important than entry. As option premiums tend to increase and decrease very quickly as the expiry approaches. The option buyer can pair their trading with technical analysis to calculate the profit booking points on the basis of support and resistance.

Best Time Frame for Options Selling:

Options selling is comparatively more profitable but all is not good in Options selling. An options seller faces the risk of an unlimited risk if their view goes terribly wrong. On the other hand, the overall profit of an Options seller is capped at the total premium collected by selling a particular option.

Both Option buying and selling come with their own Pros and cons. An option buyer has limited risks and unlimited profit potential. Whereas an Options seller faces the risk of an unlimited loss. On the upside, the chances for an option seller to make money is more than 66%. This makes Option Selling more attractive to people who want to make a decent return on their investments.

An option seller looks to gain as much as possible from the trade. Hence an Option Seller usually carries forward their position overnight till the expiry day to gain as much as they can from the premium decay. For this Option, Sellers can choose to trade in the Hourly and Daily time frame to make strategies and implement them. After execution, a strategy, you can monitor your trades on the 15 minutes time frame so that, you can get a clear picture of the underlying trend. A time frame shorter than 15 minutes will have too many trend reversals, which can confuse you as an Options seller.

Although no strategy is foolproof. Hence option sellers need to monitor their positions periodically to make sure their view of the underlying is intact. If there is any short-term volatility against the position. You can make certain adjustments to the position to limit the losses.


To sum it up, it can be said that Options Buying is like driving a two-wheeler in busy traffic. Option Buyers need to dodge vehicles and zoom in and out of traffic. Due to this, an Options buyer focuses on the short-term trend in order to make profits. For this, a shorter time frame of 5 to 15 minutes suitable for options trading.

On the other hand, Option sellers are like Cars who wait for the traffic to subside to get to their destination. Option sellers focus on the bigger picture and do not focus on short-term volatility. Due to this, a larger time frame of 15 to 60 minutes is suitable for Options Selling.

Tagged With: Options TradingDerivatives TradingOptions BuyingOptions SellingTheta Decay
Categories: Option Trading
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Related FAQs

What is the Best strategy for Options Trading?

There are many complex Option Trading strategies out there but the most profitable are some of the simpler ones. The top 3 of them are Long & Short Straddles, Long & Short Strangles and Bull/Bear spreads.

How much money do you need to begin Options Selling?

Option Selling requires large capital. Due to this many small retail traders resort to option buying where the margin money required is very less. Although with various strategies you can reduce your overall risk and margin required in Options selling. Know more about how much money is required to start option selling. The difference in the margin money required for selling a naked Option vs Selling a Hedged Option here.

Why is Options Trading more risky on the expiry day?

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How does Gamma affects risk in Options trading?

Gamma is an Option Greek that affects the change in the Option premiums. Options traders need to know about Gamma and some other Option greeks to calculate the risk per trade. The effect of Gamma becomes stronger as the expiry approaches. The Gamma also increases as an Option becomes ITM or ATM from OTM. Know more about it here.

Should you start Options Buying with a small capital?

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Which Options Greeks should you know about before Trading Options?

Options Premiums are primarily made up of two values. Intrinsic Value and Time Value. Whereas the change in the price of the Option premiums is dependent on five factors called Option Greeks. These are Delta, Gamma, Theta, Vega, and Rho. Know more about options greeks and which Greeks should a trader keep an eye on while trading Options.

Which strategies should a Options Buyer use to make money?

Option Buying is more common when compared to options selling. This is because option buying requires less capital and the maximum profit is uncapped. This lures many small retail traders who ultimately lose money when it comes to options buying for various reasons. Follow these strategies to increase your chances of generating profits.

What is Open Interest in Options Trading in Stock markets? Examples

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Can you trade options using Investing.com?

Investing.com is a great platform for traders as it provides many technical and charting tools that are beneficial for traders as well as technical analysts. As Investing. com is not a stockbroker, hence you cannot place trades directly from the application or website. In order to place a trade, you need to have a trading account with a stockbroker.

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Option Selling can be considered as a full-time business for traders. Similar to a business, you cannot expect extraordinary returns in options selling. You, as an options seller have an edge over option buyers and the chances of making money are higher. Know how much money can be made by selling Options.