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!

avatarBonta
04-27

Some Sharing on usage of options

Attended tiger's event yesterday and had some discussion with some of the attendees of the event.  Decided to do some sharing on what I understand so far about options. It isn't much, but hope that it helps. 1. Do understand that options is a derivative.  As above, options is a derivative product. Understanding the base matters.  If it's a stock, take note of how the stock behaves, the earnings period, dividend period, impact to company etc.  if it's a etf, what forms the etf, how the etf moves, any dividends.  The pros and cons of options is that wins and losses are magnified. If the base assumption is wrong, options will backfire spectacularly, regardless of buy or sell options.  2. Do understand how options works. Options is not a get rich quick scheme. It'
Some Sharing on usage of options
avatarGah
04-17
Option gambling dairies: 2 I am a degenerate gambler that got bailed out by Powell, ratio was down -60% initially today and I still didn't put in a hard stop loss in the red on the decline. I only put a stop loss when it's in the green to secure profit๐Ÿคฆ.  (Played QQQ puts for context) A lot of hoping and praying was involved and I had no conviction that the market will trend down ultimately today despite the general news on the market.  I let an option go from 0.7 to 0.18 despite holding a small portfolio. Resulting in a deficit of -600$. It took Powell and last ditch gamble to turn it back to a positive 600.  Panick and anxiety is a sign of being over leveraged and gambling out of my comfort zone. One does not have to buy 10 contracts right off the bat based on ju