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coliozenobio OP t1_j1tfcj6 wrote

Reply to comment by ImmenatizingEschaton in Just bought LUV puts (all my homies hate southwest) by coliozenobio

I can just not exercise the put options, no? Then I’d just lose the contracts I bought (about $100)?

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ImmenatizingEschaton t1_j1tfvzb wrote

You don’t understand how this works. Don’t do it.

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coliozenobio OP t1_j1tg7an wrote

I’m pretty sure I understand… if I’m wrong about LUV, I would let the contact expire. I would not be forced to purchase at a certain price. I would lose $$ I spent to buy the contracts (total of about $100)

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ImmenatizingEschaton t1_j1tgsqp wrote

You don’t understand because the price is set at market, meaning literally whatever price someone happens to be selling the option at the time your market order executes. THAT is what you are risking.

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Outof_ITM t1_j1uhcd1 wrote

Oh boy, this is going to be fun. Please post a follow up to this.

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Peppa-Piggie t1_j1tp7b1 wrote

You never want to exercise. Lose out on value from IV.

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