Sell Options For Credit They Said, What Could Go Wrong They Said

Remember when you're selling options naked that the guy you're selling them to wants to make as many multiples of return on that premium as possible. If you sit there holding a contract as it blows up in your face, you're doing the other guy a big favor.

The journey of the option seller: "I'm going to make so much money selling these options!" > "Woah...I'm down already? No problem, it'll come back." > "Hmmm...I'm down a lot, but time decay is on my side." > "Why isn't time decay dropping the value!...Whatever fuck it, I can take assignment..." > "Wait...you mean if I take assignment on my 10 contracts that I sold, I'll lose $1,000 per point that the price goes beyond my strike???" > "Oh my God, there are still a lot of days until expiration and price is already at my strike...Do I take assignment or just buy the contract back!?" > "Oh no...it's moving through my strike." > "I'm down $2,000...I just wanted to make $300..."

From there and maybe before that you get all sorts of bizarre acts committed in desperation sometimes including the selling of Calls or other attempts at improvisational position adjustment that usually only make matters worse.

It's why with options I feel you need to understand a bare minimum of basic stuff about them, have a plan of action for how you manage positions, and before you trade at a large scale you need to practice at a small scale. For all I know though, you've got a million dollar account and being $4,000 in the hole currently only represents less than half a percent of your entire account.

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