Is options trading for everyone?
The short answer is yes. The long answer is, “maybe, provided the person knows what he/she is doing “. So, the short answer is in fact a qualified statement.
I hope I can tell everyone that I know options trading, but the actual fact is I am still a newbie in this, a less than one year old newbie. I am an oldie when it comes to stocks, but not options. However, perhaps with my newbie’s exploring mind, I might be in a better position to tell it as it is.
I will be direct to the point. First, I will share a couple of current open options. Both good and perhaps disastrous, and what I learnt from them. Please hold your judgement until the end and feel free to share your thoughts thereafter. I welcome all feedback, good or bad.
This won't be convention sharing. What looks good might be bad and vice versa. Just trying to show that options trading might be different from conventional stocks trading.
First up,$Lithium Americas Corp.(LAC)$ I am a fan of minerals and miners. I started LAC using auto-invest in 🐯 app. It has been fairly uneventful for the past year or so until recently.
Having accumulated a couple of 100 shares, I had wanted to sell covered calls. However, with its share prices so low and interest so thin, the premium is so low that it seems pointless doing options.
Then Donald Trump and his team strike and LAC price took off! Sold 2 covered call options (self-explanatory below). There are 5 working days left to it. Until yesterday, the calls at $7.50 had a high likelihood of being called away.
The second example is another covered calls. $CRITICAL METALS CORPORATION(CRML)$ has been on a tear in the last week or so. The first picture was from a week ago. Look at the controversial caption and image below. Obviously, CRML was not doing that well then. But from an options perspective, it was looking okay.
Fast forward to this morning closing. From selling covered calls point of view, I am losing big!
What happened? Trump obviously...
With Trump's social media chat, together with China's rare earth minerals export restrictions, $CRITICAL METALS CORPORATION(CRML)$ made a late comeback after market closing, leading to my big potential options loss in 5 trading days' time!
Last example for this article,
This call option has obviously been losing money since market has been rising. I was about the throw the towel and focus only on its put options instead to ride its demise. In fact, this is the reason for learning to trade options- as a hedge against surprise turns in event!
Obviously, both China and Trump have to ride to save this call option trade. Out of the blue, it turns green. More green is expected next week too... but we never know for sure as it could be another TACO trade! [Facepalm] [Tongue] [Chuckle] [Evil]
In summary, options trading are vast and varied. We don't know how they go until the end because they are leveraged plays and they move fast!
While everyone should give options trading a go because of the variety of opportunities available, without proper guidance or knowledge, the leverage could destroy your wealth. Importantly, trade within your means.
Next week, I will share more if there's interest... #Options Sharing Season
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