pcwSg's New Disaster
What happened
Going negative...
Ended up with -$13USD after wiping out the account [Cry] [Cry]
Actual Loss
Actual loss for the day was $212USD, so it wasnt that bad, just lost the full $200 which was sitting inside the account.
However, any loss just feels bad... [Spurting] [Spurting]
The Actual Trade
Did 2 trades on Wednesday, expecting the FED meeting result to cause a crash.
Sell SPY CALL 521/522
Buy SPY PUT 510/509
The max win and loss is $100USD both ways, with the premium collected offsetting the premium paid for nett $0 excluding fees.[Bless] [Bless]
The Result
$SPDR S&P 500 ETF Trust(SPY)$
However, it continued to climb after hours, and the person who bought the option was smart enough to exercise it...[OMG] [OMG]
The 522 CALL which was supposed to limit the loss at $100USD did not get exercised by default... So the protection failed.
The exercised short 100 shares were automatically covered at $523.25, resulting in $125 loss.[Blush] [Blush]
Lessons learnt
1. Never hold options to expiry, else you are subjected to unpredictable results like this case.
2. Be ready to exercise your options if you hold it til expiry.
3. Advice$Tiger Brokers(TIGR)$ to automatically exercise spreads if the short leg gets exercised by the buyer.
-This may make the loss bigger than actual, but it limits the loss to max loss as long as the short leg is breached... The protection from losing more than max loss is much more valuable than potentially making some surprise money if SPY suddenly crashes premarket.[Salute] [Salute]
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