What Pitfalls Have You Encountered When Trading Options?

2024-04-13

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?

nomadic_m

2024-04-13

haven't got the courage to dabble into options trading. need a mentor, any volunteer?

OptionsTutor

2024-04-12

🎁 What Pitfalls Have You Encountered When Trading Options?

One common pitfall I've experienced is not understanding the special mechanics of options. As a seller, if the margin is insufficient, the contract might be forcefully liquidated due to market volatility, leading to huge losses.As a buyer, another easy pitfall is overlooking the time value. As time passes, the value of options decreases. If buyers do not close out-of-the-money options in a timely manner, they will expire worthless.Emotional trading is not only prevalent in options but also in the stock market. As the meme below humorously suggests, trading options after drinking alcohol will likely lead to losses.Share the pitfalls in options trading in the comments section to win tiger coins~

🎁 What Pitfalls Have You Encountered When Trading Options?

TigerPM

2024-04-12

Why Should You Exercise or Abandon In-the-Money Options Early?

For beginners in options trading, there's a common belief: if your options are profitable, you either close the position or wait until expiration to exercise them. Early exercise, they think, is a waste of the option's time value. However, there are situations where exercising early is probably the smarter move. When is early exercise a wise choice? Firstly, consider a scenario where the price of the underlying stock has surged, making a call option deeply in-the-money (or, conversely, a put option in the case of a significant drop in stock price). While this is great news, deeply in-the-money options often suffer from poor liquidity. If you decide to secure your profits, you might find the bid-ask spread eats into your gains due to this lack of liquidity. Exercising the option early can b

Why Should You Exercise or Abandon In-the-Money Options Early?

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We have seen a nice run, with the <a href=\"https://ttm.financial/S/XHB\">$SPDR S&amp;P Homebuilders ETF(XHB)$</a> 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","listText":"I have been bullish on the homebuilders sector since last year. We have seen a nice run, with the <a href=\"https://ttm.financial/S/XHB\">$SPDR S&amp;P Homebuilders ETF(XHB)$</a> 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","text":"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","images":[{"img":"https://community-static.tradeup.com/news/58379c3bc643ddefce7cfd0e3f605f2f","width":"766","height":"407"}],"top":1,"highlighted":1,"essential":2,"paper":2,"likeSize":25,"commentSize":1,"repostSize":6,"link":"https://ttm.financial/post/294930855497912","isVote":1,"tweetType":1,"viewCount":2099,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":4,"langContent":"EN","totalScore":0},{"id":294837909049592,"gmtCreate":1713000338852,"gmtModify":1713000342793,"author":{"id":"4142551860919612","authorId":"4142551860919612","name":"nomadic_m","avatar":"https://community-static.tradeup.com/news/1f3661c844e575fec696ac41d1d30e18","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4142551860919612","authorIdStr":"4142551860919612"},"themes":[],"htmlText":"haven't got the courage to dabble into options trading. need a mentor, any volunteer?","listText":"haven't got the courage to dabble into options trading. need a mentor, any volunteer?","text":"haven't got the courage to dabble into options trading. need a mentor, any volunteer?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":1,"link":"https://ttm.financial/post/294837909049592","isVote":1,"tweetType":1,"viewCount":1261,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":294479133937672,"gmtCreate":1712913819002,"gmtModify":1712919477390,"author":{"id":"3527667670880462","authorId":"3527667670880462","name":"OptionsTutor","avatar":"https://static.tigerbbs.com/a5496ca83f1c81b8c311afcb3ea30bc8","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3527667670880462","authorIdStr":"3527667670880462"},"themes":[],"title":"🎁 What Pitfalls Have You Encountered When Trading Options?","htmlText":"One common pitfall I've experienced is not understanding the special mechanics of options. As a seller, if the margin is insufficient, the contract might be forcefully liquidated due to market volatility, leading to huge losses.As a buyer, another easy pitfall is overlooking the time value. As time passes, the value of options decreases. If buyers do not close out-of-the-money options in a timely manner, they will expire worthless.Emotional trading is not only prevalent in options but also in the stock market. As the meme below humorously suggests, trading options after drinking alcohol will likely lead to losses.Share the pitfalls in options trading in the comments section to win tiger coins~","listText":"One common pitfall I've experienced is not understanding the special mechanics of options. As a seller, if the margin is insufficient, the contract might be forcefully liquidated due to market volatility, leading to huge losses.As a buyer, another easy pitfall is overlooking the time value. As time passes, the value of options decreases. If buyers do not close out-of-the-money options in a timely manner, they will expire worthless.Emotional trading is not only prevalent in options but also in the stock market. As the meme below humorously suggests, trading options after drinking alcohol will likely lead to losses.Share the pitfalls in options trading in the comments section to win tiger coins~","text":"One common pitfall I've experienced is not understanding the special mechanics of options. As a seller, if the margin is insufficient, the contract might be forcefully liquidated due to market volatility, leading to huge losses.As a buyer, another easy pitfall is overlooking the time value. As time passes, the value of options decreases. If buyers do not close out-of-the-money options in a timely manner, they will expire worthless.Emotional trading is not only prevalent in options but also in the stock market. As the meme below humorously suggests, trading options after drinking alcohol will likely lead to losses.Share the pitfalls in options trading in the comments section to win tiger coins~","images":[],"top":1,"highlighted":1,"essential":2,"paper":2,"likeSize":74,"commentSize":5,"repostSize":15,"link":"https://ttm.financial/post/294479133937672","isVote":1,"tweetType":1,"viewCount":2782,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"4096093486770560","authorId":"4096093486770560","name":"highhand","avatar":"https://community-static.tradeup.com/news/200574f2d0554f4c05c65c156ddc6e73","crmLevel":8,"crmLevelSwitch":0,"idStr":"4096093486770560","authorIdStr":"4096093486770560"},"content":"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","text":"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","html":"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"}],"imageCount":1,"langContent":"EN","totalScore":0},{"id":294466511614088,"gmtCreate":1712909576748,"gmtModify":1713186677355,"author":{"id":"3527667588142897","authorId":"3527667588142897","name":"TigerPM","avatar":"https://static.tigerbbs.com/a6704bebf28358e0d9c638e765403bd0","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3527667588142897","authorIdStr":"3527667588142897"},"themes":[],"title":"Why Should You Exercise or Abandon In-the-Money Options Early?","htmlText":"For beginners in options trading, there's a common belief: if your options are profitable, you either close the position or wait until expiration to exercise them. Early exercise, they think, is a waste of the option's time value. However, there are situations where exercising early is probably the smarter move. When is early exercise a wise choice? Firstly, consider a scenario where the price of the underlying stock has surged, making a call option deeply in-the-money (or, conversely, a put option in the case of a significant drop in stock price). While this is great news, deeply in-the-money options often suffer from poor liquidity. If you decide to secure your profits, you might find the bid-ask spread eats into your gains due to this lack of liquidity. Exercising the option early can b","listText":"For beginners in options trading, there's a common belief: if your options are profitable, you either close the position or wait until expiration to exercise them. Early exercise, they think, is a waste of the option's time value. However, there are situations where exercising early is probably the smarter move. When is early exercise a wise choice? Firstly, consider a scenario where the price of the underlying stock has surged, making a call option deeply in-the-money (or, conversely, a put option in the case of a significant drop in stock price). While this is great news, deeply in-the-money options often suffer from poor liquidity. If you decide to secure your profits, you might find the bid-ask spread eats into your gains due to this lack of liquidity. Exercising the option early can b","text":"For beginners in options trading, there's a common belief: if your options are profitable, you either close the position or wait until expiration to exercise them. Early exercise, they think, is a waste of the option's time value. However, there are situations where exercising early is probably the smarter move. When is early exercise a wise choice? Firstly, consider a scenario where the price of the underlying stock has surged, making a call option deeply in-the-money (or, conversely, a put option in the case of a significant drop in stock price). While this is great news, deeply in-the-money options often suffer from poor liquidity. If you decide to secure your profits, you might find the bid-ask spread eats into your gains due to this lack of liquidity. Exercising the option early can b","images":[{"img":"https://community-static.tradeup.com/news/fbb8775560229b9d242694e920412ba4","width":"1080","height":"2337"},{"img":"https://community-static.tradeup.com/news/2649ed98b89e55a0950399193ec6b02c","width":"1080","height":"2337"},{"img":"https://community-static.tradeup.com/news/cf2805170afeda1524210c6e662079fd","width":"1080","height":"2337"}],"top":1,"highlighted":1,"essential":1,"paper":2,"likeSize":334,"commentSize":5,"repostSize":27,"link":"https://ttm.financial/post/294466511614088","isVote":1,"tweetType":1,"viewCount":5014,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3527667647532483","authorId":"3527667647532483","name":"Option_Movers","avatar":"https://community-static.tradeup.com/news/165a4ccff157a147c5c40d359f9dc408","crmLevel":1,"crmLevelSwitch":0,"idStr":"3527667647532483","authorIdStr":"3527667647532483"},"content":"Hey, traders! Have you ever wondered about the right time to exercise your options for maximum profit? While the common belief is to wait until expiration, there are instances where early exercise could be more profitable. From handling in-the-money options with poor liquidity to capturing dividends before the stock price drops, early exercise has its advantages. We'll explore these scenarios and guide you on how to leverage this feature with Tiger Trade's latest update, version 9.1.5. Don't miss out!\"","text":"Hey, traders! Have you ever wondered about the right time to exercise your options for maximum profit? While the common belief is to wait until expiration, there are instances where early exercise could be more profitable. From handling in-the-money options with poor liquidity to capturing dividends before the stock price drops, early exercise has its advantages. We'll explore these scenarios and guide you on how to leverage this feature with Tiger Trade's latest update, version 9.1.5. Don't miss out!\"","html":"Hey, traders! Have you ever wondered about the right time to exercise your options for maximum profit? While the common belief is to wait until expiration, there are instances where early exercise could be more profitable. From handling in-the-money options with poor liquidity to capturing dividends before the stock price drops, early exercise has its advantages. We'll explore these scenarios and guide you on how to leverage this feature with Tiger Trade's latest update, version 9.1.5. Don't miss out!\""}],"imageCount":3,"langContent":"EN","totalScore":0}],"essenList":[]}