One day left and the market moves sideways ... loss!

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Options Trading

What happens when only one day is left

Continuing the previous article, we examine what happens when only one day is left and the underlying product does not move or makes hardly any move. In this example, we’ll analyze SPY again.

We are on the day before last, right after closing.

The daily performance of SPY is +0.05 %. Let's face it, this is not a very significant move.

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Let's examine, what happened to the options!

October Call options (1 day until maturity)

October Put options (1 day until maturity)

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Wow! Interesting, isn't it?

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Each one of them has devalued. So it does not matter whether you had a Call or Put option, you lost. And quite a lot. OTM has lost the highest % of its value. In case of the 112 Call -61%, in case of the 108 Put -45%.

Such are the last few days. If there is no move, both directions suffer a loss because of the loss of time value of the option.

Therefore, the books teach that beginners should not trade options in the last 30 days before maturity. If you are a beginner, you should really adhere to this directive.

How big the loss is

In the previous article, we saw what a high profit an option can make in the last two days, if the underlying product moves.

This is the other side of the coin, how big the loss is when the movement has no direction.

The coin has always two sides ...5

Feel free to ask me!

Email: gery@optionsrules.com

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