Unfavorable market trend: the value of options is affected by the fluctuation of the underlying asset price. If the price of the underlying asset is contrary to the expectation of the option holder, resulting in unprofitable options, losses will occur.
Time value decay: the value of options is not only affected by the underlying asset price, but also by the time value. As the expiration date of the option contract approaches, the time value will gradually decrease, and if the price fluctuation is not enough to offset the attenuation of the time value, it will lead to losses.
Volatility changes: the price of options is also affected by volatility. If the volatility is lower than the expected level at the time of option trading, resulting in a decline in the value of options, losses will occur.
Failure to predict the market trend correctly: option trading needs to predict the market trend. If investors fail to accurately predict the direction or time of the market, resulting in options can not achieve the expected return, it will lead to losses.
Expenses and costs: Option trading may involve transaction expenses, commissions and capital costs. These costs will have an impact on the profitability of option trading, and if the costs are higher than the income of option trading, it will lead to losses.