In this episode, Mark, Dan Passarelli and Jill Malandrino take on listener questions.

Options Drills: Today’s topic was inspired by this listener question:

Question from MarkLitwin: How do you lose money in options in the most effective way?

  • Don’t by ATM straddles
  • Don’t load up on far OTM options because they’re cheap
  • Don’t trade earnings
  • Be careful with trading weeklies
  • Watch out when selling options going into weekends or holidays

Mail Call: Listeners take over

  • Question from ejh4isu: IF I buy/sell a vertical on SPX (or any equity stock for that matter) and hold until expiration, and SPX settles between the strikes, what happens? Example: sell 2395/2400 and SPX settles at 2397.
  • Question from Darqane: Assigned on short SPX puts means getting long the underlying? But how does that work if it’s cash settled?
  • Question from Lesnod: How do you get out of the straddles? One side of a straddle is always a loss correct?
  • Question from Bobster: Can you trade options outside of U.S. trading hours?
  • Question from ejh4isu: Let’s say you’re short naked a bunch of puts and the trade goes against you, and you don’t have the money to pony up? What can your broker do?
  • Question from BULZEYE7: Are options worth it for day-traders? Or just for swing-traders?