Mistakes you may commit when you trade an option.

There are many options available in the market for buying and there are people who buy these options without even thinking about the risks of an option. They even start thinking about the profits and losses, and they also think that the options which they have bought would make them rich and will fulfill their dreams as well as beyond it.
But, they make a mistake when they buy the far out of the money option. They buy it just because it's cheap and they think this cheap option will move up as the stock moves up. These people who buy the cheap option get surprised when they can't see their stock moving up.
Normally, people commit mistake by thinking that if they buy a $40 stock instead of $50 then its going to give them a good return if the stock rises to $43. But, it's not so, you are going
to gain if its rises to $50.
Did you ever find money options decreasing in value even as the stock rises and moves towards their favor? Yes, I have seen this many times. Do you know the reason behind this? It’s
a very simple reason, options depends upon many different factors which moves the price of the option to either up or down.
Options are affected by the price of the stock, time value, volatility, interest rates and etc. So, I would suggest you to have a brief idea about what you are trading before you trade an
option.