A trader reached out to me regarding a $30,000 loss on a $1-wide credit spread position they had with a maximum loss potential of less than $500. How could this happen? In this video, you will find out.
When options are out-of-the-money (OTM) at expiration, they are said to expire worthless, which is technically correct IF they are not exercised after the market closes.
However, options can be exercised a period of time after the market closes, even on the day of expiration.
Because of this, there are scenarios where options are OTM at the time of the market close, but end up in-the-money (ITM) after-hours with a large stock price movement. In that scenario, the option will be exercised by the owner to take advantage of the intrinsic value in the option that did not exist at the time of expiration.
In this video, you’ll learn how a devastating series of unfortunate events led to a trader’s very conservative TSLA credit spread strategy leading to a $30,000 loss (100% account loss) in a weekly options expiration cycle.
Please share this video with your options trading network, as this is a very important topic. It can help save thousands and thousands of unexpected losses, and potentially save lives by helping traders avoid catastrophic financial troubles.
==== ADDITIONAL RESOURCES / VIDEOS MENTIONED ====
My 2nd YouTube Channel (Finance/Investing/Other): https://www.youtube.com/channel/UCQIPHXnm7ODW0HAdfCr1yDw
Options Trading for Beginners (The ULTIMATE Guide): https://youtu.be/7PM4rNDr4oI
=== TASTYWORKS Course Offer ===
Get one projectoption course for free when you open and fund your first tastyworks brokerage account with $2,000 or more: https://www.projectoption.com/free-options-trading-course/