Yesterday (Feb 5), I bought an $AMZN 100 (Weeklys) 6 Feb 26 (1DTE) $190 put. My entry was $225.48. I set up an advanced chain GTC order to sell, with a condition: if the price dropped below $220.38 the next day (today), it would sell.
Because of earnings, it dropped $21 before market open. The condition triggered exactly at open, way below my intended TP. My contract was now worth 16% less when it sold, which makes no sense for a market drop that big. The earnings moved well in my favor and I should’ve made way more profit. What actually happened here? How did I still end up in a loss?
Lost money on $AMZN 1DTE put after it went in my intended direction after earnings
byu/Trick_Somewhere_456 inoptions
Posted by Trick_Somewhere_456
8 Comments
Ahhh.. Learning about implied volatility, are we?
IV crush
Sounds like 2 things happened here:
1- Vol crush (look it up if you don’t know what that is)
2- Market order on an option at the open. Use a limit order unless there is a VERY tight bid/ask spread AND there is market depth (if trading more than 1 contract).
Did you check IV between yesterday and today? Sometimes, apart from Delta (stock price movement), theta (time), IV plays outsized role.
Option pricing is not only stock movement and time, it also depends high fast it is moving and how much its volatile too. Option has five parameters in their equation.
They got you with the good ol Implied Volatility trap. 🪤
Should have just did a 220/215 put spread.
Let’s ignore greek for a second…
With 1dte, you either scalp for a quick profit. Or you need to bet otm moves itm. You will not earn much from extrinsic value because there were almost none to begin with.
If amazon doesn’t go below 190 by market close, the option is worthless. Its that simple.
ITS CALLED IV CRUSH. Learn it! Happens every earnings.