Stock option are a piece of BS!

Discussion in 'Options' started by pjmalcolm1, Jul 17, 2007.

  1. yesterday a placed bought 40 July 21 0.15
    put and the stock did begin to fall but as it fell I still lost money now the put is down to 0.05. What did I do wrong? NO JOKES
  2. just21


    go to and find the expiry calendar, findout when july options expire.
  3. it expires the 23 of july
  4. Without knowing any of the details, it sounds as if you bought some cheap otm puts with not much time left to expiry. Iow time decay works against you and you probably paid too much when you bought them (wide bid ask spread?). Add to that a small drop in volatility (?) and you've got the reason why they didn't increase in value despite a drop in the underlying. Note that the further otm your options are (low delta) the bigger a drop in the stock you need to make a profit. And the drop has to be fast (to offset your negative theta) and big (to offset your low delta). Read natenberg to get a basic understanding on how options are priced.
  5. you no make good wisdom trades. Long puts bringing faster increases to acount ledger. BE GOOD SMART!
  6. segv


    You made a trade without understanding the risks of the instrument you were trading. That is what you did wrong, no joke. The document "Characteristics and Risks of Standardized Options", published by the OCC here, is required reading for every US options investor prior to being granted options trading capability. Since it is clear that you have not read this short document, I have quoted the first risk characteristic of option holders here for your benefit:

    I hope that helps.

  7. ozzie123


    It happens to me too buddie, the stock goes the same direction as my options position and the stock almost valued worthless (around 0.05-0.1).

    It's because the options expiry is too close to expiration and the time decay accelerate faster.