What Pitfalls Have You Encountered When Trading Options?

There are common pitfalls like Lack of basic knowledge about options, Excessive leverage, Ignoring time value, and Insufficient risk management. Share your experience with tigers to help beginners!

avatarLaiken
10-26
thanks for sharing
avatar呀寶
10-26
xf
ok
I had picked up AMD PUT 134 basis 06/09 hoping for some stability. AMD was at 139 when I bought it 3 days before expiry However on expiry day the stock plummeted below my strike price. Knowing I will have to sell off to prevent assignment, I bought another put at a high price and thus averaged out te price . First put was at 1.22 and the second at 7.0, thus reduced losses As I sold at 5.30.  This strategy was new to me but I am sure experienced options players know it. Also I had another put taken at 130 but luckily that held, for the same day. That was 0 day just to reduce losses and was taken at 0.1 USD.

The Hidden Trap of Cash on Hand: Why YY's $4 Billion Isn't What It Seems

$JOYY Inc.(YY)$ when you dumb dumbs talk about cash on hand as if that means anything just look at YY. It had $4 billion on hand, it’s more like 3.2-3.5 billion now and market cap is 1.2 billion. In China Cash on hand is either a fake number, can’t be used due to currency controls, isn’t invested back in the company because the company leaders China aren’t smart capitalists like American CEOs/billionaires they have no idea what to do with cash, they feel no duty to buy back stock or give out dividends that are worth 3x market cap. YY could give out $90 per share right now. They won’t. They also won’t grow or invest that money. They won’t even put the money into bonds for 5% growth. The money does nothing at all.
The Hidden Trap of Cash on Hand: Why YY's $4 Billion Isn't What It Seems
avatarwbgne
08-17
$SE 20240816 80.0 CALL$ you win some, you lose some. I'll tell you what happened, I have broken the rule I've sworn I would've never broken again, namely following pump and dump internet ideas. There was no volume here, no reason to enter the trade but I did. I let this purposely go to $0 to finally learn this lesson. Hope this will help anyone out there too, this is the proof you can only trust YOUR skills and judgement. Educate yourself. I'm so upset, however, I can only learn from this as it's MY fault. Still up 20% this week despite this blow.
avatarBarcode
07-30
$NVIDIA Corp(NVDA)$ 🚀💥 $110: The Magic Number for NVDA! 💥🚀 Kia ora Tiger traders, Fasten your seatbelts because NVDA is zooming towards my $110 target I predicted, faster than a cheetah on caffeine! 🎯🐆 We’ve hit $110.34 in overnight trading, so get those wallets ready to snag some sweet NVDA action. Now, let’s talk about my little friend, the $110 PUT option. I just hope it doesn’t dive below $110, or it’ll be like watching a slow-motion train wreck in my portfolio. 🚂💥 But hey, nothing like a bit of adrenaline to spice up our trading day, right? Why $110 is the Place to Be: 1. Support Level Delight: $110 is a solid support level, making it a prime buy spot. 2. Resistance Rebound: With resistance levels above $115, there’s plenty of room for a pr
avatarBarcode
07-30
$Tesla Motors(TSLA)$  🤑🌝📈🚀 Tesla Profits: Beyond the Moon! 🚀🌕🤑💫 Kia ora Tiger traders! 🥁🍗 Grand Total: Drumroll Please... 🍗🥁 $137.32 🇺🇸 / NZD🇳🇿$234 💰💸🤑 PROFIT IN ABOUT ONE HOUR! 💰💸🤑 Hey Tiger Traders, hold onto your seats because Barcode just landed on Planet Profit with a stellar $137.32 from Tesla options! And guess what? This all happened in just about one hour at the beginning of the open market! Talk about electrifying gains! ⚡🚗 Highlights: - It's a Tesla rollercoaster, and we're loving every twist and turn! - Elon Musk's expressions? Priceless! 😲😅 From 'Oops!' to 'We're soaring!' – he's got us on the edge of our seats. Fun Fact: Did you know? If you laid out all Barcode's Tesla profits end to end, they'd stretch from Auckland to Mars! O
avatarTiger V
07-09

Investment Reflection: Covered Call Strategy with WBA Stock

Overview On 5 July 2024, I sold one covered call contract for Walgreens Boots Alliance (WBA) $Walgreens Boots Alliance(WBA)$  stock with a maturity date of 12 July 2024 and a strike price of $10.50. I collected an option premium of $58 per contract. Subsequently, on 8 July 2024, I decided to roll over the contract to a new maturity date of 26 July 2024, collecting an additional premium of $15 when WBA stock price fell to $10.83. Initial Covered Call Strategy The initial covered call strategy was implemented with the aim of generating income from the WBA stock, which I already owned. By selling a call option with a strike price of $10.50, I anticipated the stock might not surpass this level by the maturity date, allowing me to retain the premiu
Investment Reflection: Covered Call Strategy with WBA Stock
avatarTiger V
07-08

Investment Reflection on Covered Call Strategy for Walgreens Boots Alliance (WBA)

Overview On July 5, 2024, I sold a covered call contract for Walgreens Boots Alliance (WBA) $Walgreens Boots Alliance(WBA)$   stock with a strike price of $10.50 and a maturity date of July 12, 2024. This strategy allowed me to collect a premium of $58 per contract, providing an immediate return on my investment. This reflection examines the performance and implications of this option strategy in light of Walgreens’ current business challenges and market conditions. Walgreens' Business Context Walgreens is currently experimenting with a value-based care model through its VillageMD partnership. This model aims to keep patients healthy by providing a fixed fee per patient, incentivizing preventive care over hospitalization. While this appro
Investment Reflection on Covered Call Strategy for Walgreens Boots Alliance (WBA)

Option trading tips

Tip to option trading  1) if you can get 50 percent profit in 3 days of trading, close it 2) it is not about how much you want to make. It is better to get 5 percent profit with 95 percent probability then to get 50 percent profit with lower probability  3) risk management is important in option trading. Don't ever do nake option. It is better to make lesser then to lose money. Never risk 1 percent of your capital in 1 counter 4) You can find the day high within first few hours then queue for that day high (sell call) to sell vertical and go to sleep. Or use the option calculator to help you estimate how much option should cost 5) buy option when iv is low and sell option when iv is high. You realised even if stock doesn't move, but you sell during high iv, you will make a very g
Option trading tips
avatarTiger V
06-15

Investment Reflection: Adjusting the WBA Option Portfolio Amidst Adverse Movements

On June 14, 2024, I made a critical adjustment to my Walgreens Boots Alliance (WBA) $Walgreens Boots Alliance(WBA)$  option portfolio in response to a significant drop in the stock price, which fell to $15.30. This decline positioned the stock below the strike prices of my sold put options. To address this unfavorable situation, I decided to buy back two sets of sold put options and establish a new position with a lower strike price. Here’s an analysis of the strategy employed and its implications. Overview of Adjustments Buying Back Sold Put Options: Put with $20 Strike Price, Maturing on June 21, 2024: I bought back this sold put option, incurring a cost of $314 per contract. This position was significantly deep in-the-money, and buying it b
Investment Reflection: Adjusting the WBA Option Portfolio Amidst Adverse Movements
avatarMichane
05-01
I was searching through Google & happen to see this.. Someone actually asked whether Theta gets affected after the weekend.. And there was this nice reply with a diagram to show an example & that's so helpful!  So the answer is "yes, Theta is paid over the weekend". Those who buy options & worrying time decay etc. like me over weekends/public holidays, hope this puts your mind at ease..[Tongue]  
$Meta Platforms, Inc.(META)$ - I sold META puts a couple days ago. Although I believe META can rebound in the future, the capital used to take on those put positions will likely be tied up for at least 3 months. As someone who tries to unite theory and practice, I didn't really feel like talking much tonight and wanted to remain quiet.Despite lacking energy, I still need to maintain daily observations. An interesting question arises - after an earnings release, will market makers start killing off option positions?Call options will undoubtedly get crushed. For META's put options this week, the 450, 470, 440, 400, 480 strikes have the highest open interest. Looking at the intraday movements, although market makers can't control everything, they sti
$NVIDIA Corp(NVDA)$ failed to withstand the squeeze pressure and plunged towards $800. The overall market had a significant number of options expiring on April 19th, with a heavy tilt towards puts, creating a resonance effect. As my friend said, it seems like we have an "option expiration day" every month now.Despite our thorough analysis this week, our optimism was a bit excessive. However, the silver lining is that after experiencing this minor squeeze, we'll be more cautious when we encounter similar option expiration setups in the future.Although NVIDIA's stock price took a substantial hit, there's some good news. After this Friday, the massive number of put options expiring on April 19th will be cleared, leading to a cliff-like decrease in NV
not selling puts at support... then stock fall further and you miss out on either higher premiums or hit strike price.  be patient, and wait. when there's no trade set up, don't trade
I have spent over six months getting an understanding of options, very much still a novice. but lastweek made the plunge from demo to real. Puts, no thanks you can loose your shirt. I'm just into long calls like 2026 calls. And just stocks I really understand. Obviously im not here to give advice, just getting an understanding, acting on it in a very small way and seeing how it goes
This is tough, I don't understand it 

Are Homebuilders Having a Correction?

I have been bullish on the homebuilders sector since last year. We have seen a nice run, with the $SPDR S&P Homebuilders ETF(XHB)$ up over 30% since I first mentioned it last November. I have been profitting from this ETF by selling cash secured puts. However, recently there has been a selloff and my most recent trade ended up with a -5% loss. XHB Put Chart I decided to get out of the trade as it was not able reclaim a previous resistance. This is to prevent getting caught in a potential downturn which eventually happened. Exiting a cash-secured put position at a loss demonstrates a disciplined approach to risk management. Cash-secured puts offer the potential for generating income while providing downside protection, but they can turn negativ
Are Homebuilders Having a Correction?
haven't got the courage to dabble into options trading. need a mentor, any volunteer?