Option Trading Mistakes Beginners Make (Watch Before Investing!)

Option trading mistakes all beginners make and how to make money.

Mistake 1: Options is like a war between the buyer and seller - each one makes their plan of attack, how and when they intent to enter the battle, and what their strategy is along the way. The spoils rewarded to the one with the best strategy and possibly a bit of luck - but rarely can you jump into a trade and expect to win consistently without having a strategy that favors you.

Mistake 2: We’ve all done it, going all in - betting it all on red - now if you’ve made this mistake chances are you quickly learned from it and hopefully fixed it, having no other choice- of course some never learn. ANYWAY, trading with too big a percentage of your portfolio on 1 idea is one of the worst mistakes you can make because you will blow up your account and then won’t have any money left to make any further mistakes.

Mistake 3: Trading is hard enough - why complicate it with too many positions? As one person, you can only manage so much - especially when it comes to options. You need to make sure you are not overwhelmed by the amount of positions you take on that you can’t properly give each the attention it deserves. Even when building your stock portfolios, I see people try to buy 100 different stocks when all you need is around 10.

Mistake 4: The one important thing we must start to realize sooner rather than later is that there is a difference between investing, and gambling. The unfortunate truth is a lot of people don’t have the patience to invest so they turn to gambling and speculation - and one of the most popular forms of speculation is buying weekly options.

Mistake 5: You get in a trade and when it comes time to sell you realize you got nobody to sell to. I learned this lesson the hard way I’m afraid when I was first learning about options and messing around with some low volume calls. In this section we look at some examples on the ROBINHOOD App

Mistake 6: There is an overwhelming trend in the stock market to do the opposite of what you’re supposed to be doing - have you ever noticed this? You would think buy low sell high would be something easy to follow but you see it all the time - they buy into the hype at the top and then would panic and sell when prices are at a low. These emotional decisions will also affect you when trading options - more specifically in managing your trades. This is by far the best tip that I learned over the years of trading options myself - and that is to let your winners ride, and cut your losses short.

Mistake 7: When you find something that works you have to stick to that for as long as possible. Too often I see investors and traders all over the place with their investing - maybe you’ve experienced this yourself - one week you want to buy calls the next week you say hmm I want to sell some puts. If you are not consistent with your strategy your gains will be just as big of a mess

Mistake 8: One of the most important things you need to understand when it comes to option trading is implied volatility and how it affects option prices. This is the key in my opinion to profit. If you understand implied volatility you can make money with options. When implied volatility is high then the options premium is high. This is important to know because when buying options you are risking buying very expensive options. When implied volatility decreases, well that in turn causes the option prices to decrease. So what happens when you buy a call, and IV is high - and then IV goes down? Your option will go down and you’ll lose money.

Mistake 9: If you are serious about investing, trading, learning options, do yourselves a favor and invest first in a notebook. This will help you out immensely when it comes to all the rules I mentioned in this video by not only following them but spotting mistakes you might make along the way. Maybe you don’t realize you are trading too many positions or not being as consistent as possible until you put it down on paper and review yourself. My personal preference is to physically right down instead of using spread sheets or anything digital. I write down my plans for the month, the trades I enter, my exit strategy, and keep track of them on 1 page.

I am not a financial advisor - none of the above video is meant to be taken as investment advice. I am just showcasing MY own strategy and my investments should not be tried and duplicated based solely off the information in this video for risk of losing money.

[PandreaMoney]

Went for a semi-cringe thumbnail today to see how it does with the all mighty algorithm. P.S. I hate it, but did it make you want to click the video??? Thoughts? :)

[danieljamal]

Nobody can become financially successful overnight. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking bold steps we need in other to reach our goals.

[bcool]

I've watched alot of people trying to learn options they either suck, talk to much, and take forever to get to the point and show you what do you.. you my friend helped me understand a little better .

[ronyorobio]

Your style is the freshest and simplest, yet highly informative that I have found so far. I enjoy so much watching and learning from your videos. Thanks!

[kalyaniparanjape]

Hello ! This is so much fun ! Thank you very much for explaining this difficult subject so easily and simply 👍

[lifewiththenungesters]

I found your channel through your collab with Andrei Jihk. I have never even considered buying or selling options, but love the education your provide. Thank you!

[dfraney]

I love your videos. Great humor! Always a very clear explanation of the topic and thanks for the written transcription with the video!

[swallace]

Thank you for making me realize i've been hitting the trifecta on what not to do

[buenolife]

Great Info!! Your videos are so helpful!

[beaglewong]

Both very informative and entertaining. Thank you for sharing your expertise.

[rsabblut]

Love the vids man. learned so much from you. Keep up the hard work! not only paying off for you but for us as well!

[Uweyo]

Thank you for this amazing video! Maybe you could make a video about the wheel strategy

[aryanmalhotra]

From my experience trading options can be a bit overwhelming and confusing especially for new traders, but with a good understanding and a proper strategy it can be a very profitable venture.

[WOLF]

Thanks bro, cool stuff. Watched your videos like for 3 hours straight

[omrjnbrk]

Thanks to Andre for introducing you from his channel. Since then I ve been watching you and learning a lot of mistake that I made

[dwightmendenhall]

Man I absolutely love this video. Crazy thing is, I've probably seen it months ago and couldn't comprehend because I was less seasoned as an options trader. Now I've gone through every segment of this video and you speak truth. I had to make mistakes to learn what not to do and I had to do alot of research to formalise a consistent strategy. I like the fact that you sell and I looking to move away from weeklies but still get a weekly ROI

[Optionbeautiiny]

i honestly love leap options that are deep in the money. but im glad you mentioned the volume and open interest thing because though i kind of knew it was important i didn’t know completely why.

[dbrandon]

liked and subscribed! best trading content on YouTube!! Thank you!

[ItsCulby]

Love the channel! Will there ever be a portfolio review or reveal?

[evanmaskell]

I started in August with a few thousand, I got a little to confident with buying calls on stocks I liked, 40% of my portfolio was options lol, was up 233% in 3 months and it all crashed and burned now I’m back where i started but I’m glad I messed up because now I know next time, thanks for the tips man!