Imagine you've been trading options for 5 years, generally successful playing earnings and now you're getting comfortable scaling your strategy. Risk in trading options can be really tricky to manage because we can have extended durations where things are quiet, long win streaks, etc.
NVAX had an implied earnings move of ~13%, resulting in a post earnings release move of >100%. Risk is always realized. It can take some time, years even. But sooner or later it's realized.
https://www.reddit.com/r/options/comments/1cqfonc/trading_earnings_an_important_reminder_via_nvax/
Posted by esInvests
3 Comments
Indeed! Also depends what is your strategy, I play earnings quite often but never use naked options, only spreads or condors, I think knowing your max loss prior the trade entry is the only way to survive in this business (of course I assume you don’t have any other form of hedge if this is the case naked options are viable as well)
“Risk is always realised.”
What does that even mean?
I have a question. If hedge funds are net short a position what generally happens to that underlying asset?