And it has become clear to me now that I have dipped well out of my wheelhouse.
Thanks for the attempt at explanation at least haha. (Though to me, this sounds like a monopoly-money game, really odd concept).
Thanks for the attempt at explanation at least haha. (Though to me, this sounds like a monopoly-money game, really odd concept).
I actually think it’s a great thing to let someone easily try out “let me try out options trading, I’ll start with $100”. The write ups about r/wallstreetbets though are sometimes heartbreaking.
So like you said, at least you know what you don’t know!
You would almost expect this to happen occasionally, if you’re not super careful, due to the massive volatility of options.
Being short out-of-the-money call options will expose you to a ridiculous downside if the stock makes an unexpected upwards move. Easily 10x-100x your deposit.
Basically you always had forced liquidation or some sort of a hedge on the opposite leg that made sure you couldn’t lose more than the leveraged amount you’ve bet on.
When you are short options you can take down the whole financial system with you.