I Clicked The Wrong Button When Trading And It Cost Me USD250

On 30 March 22, I closed my Tesla PUT contract (Strike Price USD980, Expiry Date 29 April 22) and locked in a profit of USD150. The contract was just opened one day earlier on 29 March 22.

I usually roll my contract manually as I want to have better control over the closing premium price of the existing contract and opening premium price of the new contract. So, after manually closing the SP980 PUT contract, I decided to sell another PUT on Tesla at the strike price of USD990, with the same expiry date. The range of premiums was from USD3,000 to USD3,200.

I would usually start my bid at the highest possible price of USD3,200 before adjusting downwards until the contract gets assigned. However, in this round, I was assigned immediately when I confirmed my bid price of USD3,200, which was quite strange as people usually don’t buy at the highest asking price.

I then went to look at my buying power and realized a bulk of the money that was set aside for the cash-secured PUT contract was still available. I checked my trades again and was shocked to realize that instead of selling a PUT contract (SP990, expiry 29 April), I actually bought a PUT contract instead.

I then tried to quickly sell the PUT to close the contract but was unable to do so as the share price of Tesla was rising. I eventually sold the PUT contract at USD2950, which was a loss of USD250, as I paid USD3,200 for the PUT contract just minutes earlier.

An options trader often buys a PUT contract to hedge against a downtrend. The agreed strike price is the price the buyer of the option contract can sell if the share price falls below the strike price on the expiration date. If the share price falls to $0 on the expiration date, the buyer of the PUT contract can still sell at the agreed strike price.

See how a PUT option works here (explained in layman’s terms):
How does PUT Option Works?

Therefore, when the share price keeps falling after the PUT contract was purchased, the premium of the contract will keep increasing and the buyer can then sell away the PUT contract at a profit.

In my case, the opposite happened and the share price actually went up after I bought the PUT contract, so the premium of the contract dropped and I had to sell at a lower premium to close the contract.

Concluding Thoughts

I share this experience so that you can take reference and be more careful when you trade in the future. You may have accidentally pressed the wrong button (buy become sell or sell become buy) and incur a loss for nothing. So, always check your trades before confirming the order or you may have to pay a price to reverse it. Don’t trade when you are too tired (especially the US stock market opens in a different timezone as where you are in) as you may be prone to error when you are sleepy or tired. I hope you find the sharing useful.

***
Keen to learn about options trading but do not wish to pay for expensive courses, this newbie guide will help gain the knowledge and fundamentals to understand options better. And it’s totally free!
The Newbie’s Guide To Options Trading

The LEAPS Strategy has helped me make more than USD120,000 in 2021. Here’s all you need to know about this strategy that can help you increase your wealth exponentially:
The Ultimate LEAPS Options Thread

Looking for ideas on what stocks to invest in or which stocks to trade? You can take reference from what I have been buying or selling. I try to update them as soon as I can in this section, as well as share my thoughts behind executing these trades:
MY TRADES

If the bear market in 2022 is making feel depressed as your stocks come tumbling down, read this article to find out how you can use options trading to help you claw back some of your losses as you await market recovery:
How I Do Earn Even When The Stock Market Is Bearish?

Also, check out my trading strategies in different market conditions, whether it is bullish, bearish or volatile:
How Not To Lose Money In Trading? | My Trading Strategies For Bullish, Bearish And Volatile Market

I watched tons of videos on YouTube since 2020 and if you are wondering if there are any useful channels that you can subscribe to for learning market trends, TA, FA, check out this compilation here:
My Secret Weapons For Options Trading: I Watch These YouTube Financial Channels Every Day

I concluded my first year of options trading with more than USD160k of gain, see how I do it and the capital I use for every month to give you a sensing of the percentage yield I get out of my gains:
1st Year Options Trading Recap: The Journey Towards SGD$217,509 Profits In 2021

This blog is as authentic and as transparent as I can share, I do not just show the wins and hide the loss. I have made some very bad decisions in the first 8 years of investing and paid a huge price for them. Here is the loss I have accumulated during these years. I hope you learn some lessons from my mistakes.
I Cut $135,715 Worth Of Losses In The Last 1.5 Months

Want to learn more about Technical Analysis (TA) but find it difficult to grasp the concepts? This article brings you TA at a glance, and helps you understand key terminologies, indicators, and techniques used in TA to equip you with the knowledge that can empower you in your investing/ trading journey.
The Newbie Guide To Technical Analysis (TA)

Excited to start your trading journey or perhaps try out with a paper trading account to build your confidence in trading? Check out this step-by-step to help you get started:
How To Buy Options on Interactive Brokers (Step-By-Step)

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