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

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