Part 3 Learn Institutional Trading

1. Option Buying Risks

High time decay

Entire premium can be lost

Low probability of profit if market does not move fast

2. Option Selling Risks

Unlimited loss potential

Requires high margin

Needs strong risk management skills

3. Volatility Risk

Changes in implied volatility affect premium prices.

4. Liquidity Risk

Low liquidity leads to poor fill prices.

5. Emotional Risk

Options move fast, causing psychological stress for beginners.

Thus, risk management, position sizing, and discipline are essential.