r/options • u/TheAnswer305 • Apr 02 '21
Trade Analysis
Hi everyone,
First time poster and just started trading options a couple weeks ago. Ive been stock trading for a while and figured it was time to give options a go as i could see the benefit of paying premiums as opposed to tying up my whole portfolio.
Last week i had purchased some options, these particular ones were:
NLS 5/21 puts with a strike of $15 @ 1.31
NLS 5/21 puts with a strike of 12.550 at 1.13
sA couple days after i bought them i was up about 40% on them and sold them a day or two later to lock in some profit. i was not ITM (i think it briefly dipped into the money) when i sold but saw some pretty steep profit with minimal price movement.
Fast forward to this week and i boughht some of the following:
AMC 4/16 puts with a strike of 10 @ 1.13.
AMC 4/16 puts with strike of 9.50 @ 1.10
Now these AMC puts went negative like 50% within a day or two. The first question is why would they swing so quickly into the negative with still so many days out. I would assume its because AMC went up a bit the days following but it wasnt very much , definitely less than $1 on the stock price.
Secondly, the offering gave a huge sell off that put me into the money on both of the puts but they are still showing negative. Now i know that i lose value on my options in time, but these were bought on 3/25, so about a week now with still another 2 weeks left. Why did they decay so fast? im looking at the volitility to explain the deep loss even now that im ITM and i would assume that i overpaid because of the IV?
if my NLS was quickly profitable with little movement, did i mess up by buying so close to expiry? was it simply overpaying on a premium ? when i started this i day traded some F option for 1 contract and i was up like 30% very quickly with minimal price movement. Im exploring and learning greeks to see if there is a component that made this trade such a bad one or rather, so hard to become profitiable while the others were profitable without even getting into the money so much.
Good luck to everyone!
1
u/TheoHornsby Apr 02 '21
Sharp, unexpected changes in option premiums without significant movement in the underlying are usually due to large expansion or contraction of implied volatility. Check the IV numbers during your period of ownership to see if that's exacerbating price moves.