Why the Myth that 90% of All Options Expire Worthless is 100% WRONG

Why the Myth that 90% of All Options Expire Worthless is 100% WRONG
October 16, 2014 Market Traders Institute

Article by Chris Irvin published on Equities.com

Image courtesy of: Equities.com

I came across a website the other day that is made up of lists. As I was perusing the site, I thought I would type in “Trading Myths” just to see if there was anything listed. The search returned “The top 25 reasons why we couldn’t find what you were looking for.” Naturally, I started thinking about what I would put on a list of “Top 25 Trading Myths.”

I would have to begin with my personal favorite:
“90% of all Options Expire Worthless.”

As the Director of Options Education at Market Traders Institute, I hear this one all of the time. It is a mantra for some… “You can’t make money in the options market unless you are selling options first!” When I ask them why they believe that to be the case, they regurgitate the myth “because 90% of all options expire worthless, that’s why!” This statement tells me a bit about their depth of knowledge. I actually appreciate students that carry this belief because once I dispel the myth, that student typically becomes more teachable. The truth of the matter is that approximately 90% of all options go un-exercised, but this is very different from being worthless.

Click here to read the full article on Equities.com

Join us for an upcoming options webinar, where you could learn more about this underlying issue and its possible effects on your trading strategy.

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