Misunderstanding 1: Reject the seller's position.
In option trading, the initial introduction usually emphasizes that the seller has to bear limited income and potential unlimited risks, which makes investors fear the seller's position. However, if we look at it from different angles, there are also potential unlimited risks in holding futures or stock positions. For investors with futures trading experience, it is unreasonable to be excessively afraid of selling options.
In addition, the concept of limited profits is also a myth. The success of option trading is influenced by the time value, and the seller can not only get the ups and downs, but also have the opportunity to get additional income through the time value. Although the profit is relatively limited, it is not an unfavorable strategy because of its high chance of winning.
Optional sauce finishing release
Myth 2: Ignoring the loss of time value
Another common misunderstanding is to ignore the influence of time value loss. When buying options, the premium paid by investors includes two main parts: intrinsic value and time value.
Intrinsic value refers to the difference between the exercise price of the option and the spot price, and the remaining royalty is the time value.
Investors will find that when buying options, they actually spend most of their time. Unfortunately, as the final settlement date approaches, the time value has the characteristic of accelerating decline. Therefore, the longer the position holding the buyer's option, the greater the loss of time value, which may eventually become zero.
Investors should avoid overestimating loss positions and wait for solutions, because even if the market turns in a favorable direction, it may still cause great losses due to the loss of time value. On the contrary, the longer you hold the seller part of the option, the more time you earn, which can be used to make up for the loss of slight misjudgment.
Myth 3: Ignore the impact of fluctuations on profits.
Ignoring implied volatility often leads to unprofitable or even loss even if the trend is judged correctly.
Implicit volatility is the volatility of the subject matter calculated by the current premium price of the option and the mathematical formula. In short, the higher the implied volatility, the higher the royalty, and vice versa.
Ignoring implied volatility to buy options may lead to buying overvalued options. Even if the market trend is in line with expectations, royalties may not move or even lose money because of the loss of time value.
On the contrary, buying options with low implied volatility may mean buying undervalued options. Even if the market trend deviates, the loss may be reduced or even no loss.
There is usually no definite standard to judge whether the volatility is high, but it can be compared with the weekly average or the monthly average. In view of the difficulty for ordinary investors to obtain relevant data, it is suggested to avoid buying at the selling price, and it is best to buy near the buying price. Especially for contracts with long performance price and poor liquidity, it is even more inappropriate to chase the price rashly.
Myth 4: I don't understand the impact of performance price on profits.
Investors often mistakenly think that the market index will rise or fall by 100 points, and the value of call options should also increase or decrease accordingly. In fact, this relationship is determined by the Delta value.
Take the option with Delta equal to 0.5 as an example. When the spot index rises by 100 points, the premium will increase by 50 points, that is, half of the increase. Similarly, when the spot index drops by 100 points, the commission will only drop by 50 points.
Therefore, investors can choose options with different strike prices to trade according to the size of Delta, so as to control some risks. Choosing an option with a larger Delta can bear greater risks, but it is also accompanied by greater profit potential. On the contrary, choosing the option with smaller Delta can take less risks. Delta always ranges from-1 to 1, call options range from 0 to 1, and put options range from 0 to-1.
Theoretically, the Delta of the parity call option is 0.5, and the higher the price, the greater the Delta value, and finally approaches to1; The farther the price goes, the smaller the Delta value is, and finally it approaches zero.
Myth 5: Trading in the Sun.
Under the trading mode of option T+0, the market fluctuates rapidly, and every trading day seems to have profit opportunities, which attracts some radical investors to conduct intraday trading, relying on feelings rather than theory. The option market fluctuates rapidly, and the contract price rises and falls rapidly.
But frequent bargain-hunting and guessing the top are often at a loss. The market is changeable, so it is difficult to accurately judge every market, and it is also difficult for investors to operate correctly every time. The result is often that the more you fall, the more you buy and the more you fall. At first you thought it was copied at the bottom, but later you found it was halfway up the mountain.
It is wise to trade with the trend. Don't operate too frequently to avoid losses. Maintain discipline and don't bargain-hunting or predict the top of the market easily. Good trading philosophy and trading discipline are the basic elements of investors. Only in this way can investors strive for more profits while preserving capital. If the market is uncertain, you can choose to wait and see or keep short positions and focus on the familiar market instead of missing opportunities and avoiding wrong transactions.
Myth 6: Blind Margin Option Contract
In traditional stock investment, investors usually choose to make up their positions to reduce the overall cost, believing that the stock price will eventually rebound. However, the difference between option investment and stock investment lies in the time limit. The change of option contract value, especially from real value to virtual value, may rapidly increase losses and face the risk of contract zeroing.
When the trend is misjudged and the contract is in a virtual position, stop the loss decisively and wait for the market to enter the market again. When the contract in virtual state suffers further losses, it should avoid making up or adding positions rashly. Option investment should not blindly adopt the "low cost" strategy of traditional stocks, and wrong short positions may lead to further losses. Although the patent fees of the flat value contract and the imaginary value contract are relatively low, and the leverage effect is large, they may be able to obtain greater profits in some market situations, but from the perspective of risk management, it is safer to choose the real value contract.