“Options are the same as stocks, just cheaper!”
Ever heard a pitch start like that?
Well, it’s wrong.
Options trade much differently than stocks, and thus why it’s easier to lose money with options. (and this is coming from a 20+ year options trader).
One key difference is options use of “implied volatility.”
Implied volatility — shortened to IV — measures the potential move (up or down) a stock could go.
When Gamestop went from $20 to $400+, the “potential move” for GME was massive. It could drop $100 tomorrow, go up $100 etc.
It’s very important to understand how “IV” works if you do any type of options buying or selling. Whether you trade naked puts or sell covered calls, let me give you a 3-minute lesson on implied volatility.
Click here as I demonstrate this options idea using Gamestop as a case study.
(will only take 3 minutes of your time… and it’s free)