OAP 064: The 15 1/2 “Avoidable” Options Trading Mistakes You’re Making Right Now

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Nobody’s a perfect trader - not by any stretch. We all make mistakes, and when we own up to them, we dramatically increase our ability to overcome them in the future. With more than 35k members in our community here at Option Alpha, I've seen every possible situation and mistake you could come up with - and today we're going to go through what I know are the top 15 1/2 options trading mistakes people are making right now.

Trust me; it wasn't easy to narrow these down to 15. Truth be told, I wanted to start rattling off more than 30, but I knew that I had to focus on only the most critical areas that could help shift or alter your trajectory. And of course, I'll make sure also to cover and talk openly about my shortcomings and challenges as a trader. In the end, my hope is that you recognize just one area where you are struggling and put together a plan of action to overcome it by the end of the week.

The 15 1/2 Avoidable Mistakes Made By Options Traders:

1. Not Making the Time

  • People say they do not have enough time to learn options strategies.
  • But you do have enough time, you are just not willing to sacrifice something else to do it.
  • You work too hard for your money not to invest the time to learn how to build your wealth and make it work for you.

2. Not Doing the Homework.

  • You cannot get the result without putting in the effort and doing the work.
  • It should be work to learn how to change your financial future.
  • It is important to do the work to get to where you need to go, even when it is difficult.

3. Using Prayer and Revenge Trading

  • When a trade is going badly, many traders pray that it comes back around.
  • Others revenge trade, meaning they fight the trade and assume that they are right, forcing your perspective onto the market.
  • This removes all type of logical thought from the trade. Not thinking about the numbers and the statistics, instead become an emotional trader.

4. Having the "I'm Right" Trading Mentality

  • Even after being shown the numbers and proof, people are still stuck in their mentality
  • Stuck on being the person who is right instead of becoming the person who is profitable.
  • Look for the mathematical principles and systems that are in place that show you how to make money. Do not assume that you are right and then force it in.

5. Grabbing the Biggest Bat

  • Wealth building is a series of small individual steps along the way, not one big opportunity.
  • It is better to have the ability to take small steps with all the little opportunities along the way that eventually add up to a big outcome.
  • Do not over allocate your positions, there will be many opportunities.

6. Not Flipping the Coin Enough

  • Trading a 70% chance of success trade, you may not have 7 winners and 3 losers after the first 10 trades.
  • You have to be in the game long enough to see the probabilities work out; the more you trade, the more they work out more towards the expected outcome.
  • Options trading is a long-term game — it is a matter of probability and expected outcomes over the long run.

7. Trouble Being Consistent and Persistent

  • Success is reached by consistently doing the right thing, time and time again.
  • Being persistent is key, even when it is hard or you do not want to do it.
  • Results come with time, and consistently being persistent.

8. Changing Assumptions

  • It does not matter what all your assumptions add up to, because everything will be about the same in the end.
  • No matter what allocation or diversification mix you have, eventually it leads to the same outcome.
  • Set core, foundational assumptions that you believe in and work those assumptions over the long term.

9. Having  A Shiny Object Trading

  • Trading something specific, but only trying it for a day or two, never giving it the opportunity to work itself out.
  • This does not allow for long-term strategies to take effect.

10. Not Accepting the Uncertainty

  • With options trading, you have to accept that there are things that you cannot control.
  • Stop worrying about the things you cannot control, accept the uncertainty and focus on the aspects that you can control.
  • The way to get through a black swan event is to not have all of your money in one single position and have ample cash leftover - 50% of your account in cash.

11. High School Fear

  • A mentality of being afraid to tell others that you are an options trader
  • Important for your growth as a trader not to keep your trading sheltered or hidden from others in your life.
  • Need the support and foundation around you to help foster your education as an options trader.

12. Not Teaching Someone Else

  • Often traders are not teaching others from their experience and knowledge learned.
  • Teaching someone else reaffirms all the things you know to be true.
  • The more you teach, the more the foundational elements and the numbers and the math get solidified in your mind.

13. Not Having Any Concrete Goals.

  • Many people say they do not have any goals for their trading
  • You have to have concrete goals in order to know if you will be successful or not.
  • You have to reverse engineer your goals all the way back to create your strategy.

14. Not Playing the Math Game

  • The options trading game is just a game of math, with expected outcomes and probabilities
  • The longer you wait to learn the math game, the longer it will take to get to success.

15. Not Investing in Yourself

  • Any time you invest in your learning and education, it always pays more dividends
  • Investing in yourself creates new opportunities

15 1/2. Do Not Have an Accountability Partner/Coach

  • Get accountability in your life, which will keep you on track to doing the things you need to do, consistently.
  • This can be your spouse, sibling, or friend who checks in with you once a week where you tell them about your progress.


  • When a trade goes against you, know that it is just part of the system. Don't fight the trade, just move on. Take what lessons your learned and try not to recreate the situation or environment where you were greedy, fearful, or emotional.
  • They think they see a really good set up and assume that if they allocate the biggest percentage they can, then it will be successful. More often than not, you end up swinging and missing.

Option Alpha Podcast Show Notes[FREE Download] Podcast Show Notes & Transcript PDF: No time to read the show notes right now? We've made it incredibly easy for you to save time by giving you instant access to the complete digital version of today's show. Click Here to Download Your FREE Copy ?

Free Options Trading Courses:

  • Options Basics [20 Videos]Whether you're a completely new trader or an experienced trader, you'll still need to master the basics. The goal of this section is to help lay the groundwork for your education with some simple, yet important lessons surrounding options.
  • Finding & Placing Trades [26 Videos]Successful options trading is 100% dependent on your ability to find and enter trades that give you an "edge" in the market. This module helps teach you how to scan properly for and select the best strategies to execute smarter option trades each day.
  • Pricing & Volatility [12 Videos]This module includes lessons on mastering implied volatility and premium pricing for specific strategies. We'll also look at IV relativeness and percentiles which help you determine the best strategy to use for each and every possible market setup.
  • Neutral Options Strategies [7 Videos]The beauty of options is that you can trade the market within a neutral range either up or down. You'll learn to love sideways and range bound markets because of the opportunity to build non-directional strategies that profit if the stock goes up, down or nowhere at all.
  • Bullish Options Strategies [12 Videos]Naturally everyone wants to make money when the market is heading higher. In this module, we'll show you how to create specific strategies that profit from up trending markets including low IV strategies like calendars, diagonals, covered calls and direction debit spreads.
  • Options Expiration & Assignment [11 Videos]Our goal is to make sure you understand the logistics of how each process works and the parties involved. If you don’t feel confident in the expiration processes or have questions that you just can't seem to get answered, then this section will help you.
  • Portfolio Management [16 Videos]When I say "portfolio management" some people automatically assume you need a Masters from MIT to understand the concept and strategies - that is NOT the case. And in this module, you'll see why managing your risk trading options is actually quite simple.
  • Trade Adjustments/Hedges [15 Videos]: In this popular module, we'll give you concrete examples of how you can hedge different options strategies to both reduce potential losses and give yourself an opportunity to profit if things turn around. Plus, we'll help you create an alert system to save time and make it more automatic.
  • Professional Trading [14 Videos]Honestly, this module isn't just for professional traders; it's for anyone who wants to have eventually options replace some (or all) of their monthly income. Because the reality is that mindset is everything if you truly want to earn a living trading options.

Option Trader Q&A w/ Larry

Trader Q&A is our favorite segment of the show because we get to hear from one of our community members and help answer their questions live on the air. This week's question comes from Larry who asks: How do you go about finding a trade and deciding on which to choose? What is the analysis step-by-step?

Remember, if you’d like to get your question answered here on the podcast or LIVE on Facebook & Periscope, head over to OptionAlpha.com/ASK and click the big red record button in the middle of the screen and leave me a private voicemail. There’s no software to download or install and it’s incredibly easy.

PDF Guides & Checklists:

  • The Ultimate Options Strategy Guide [90 Pages]: Our most popular PDF workbook with detailed options strategy pages categorized by market direction. Read the whole guide in less than 15 mins and have it forever to reference.
  • Earnings Trading Guide [33 Pages]: The ultimate guide to earnings trades including the top things to look for when playing these one-day volatility events, expected move calculations, best strategies to use, adjustments, etc.
  • Implied Volatility (IV) Percentile Rank [3 Pages]A cool, simple visual tool to help you understand how we should be trading based on the current IV rank of any particular stock and the best strategies for each blocked section of IV.
  • Guide to Trade Size & Allocation [8 Pages]Helping you figure out exactly how to calculate new position size as well as how much you should be allocating to your each position based on your overall portfolio balance.
  • When to Exit/Manage Trades [7 Pages]Broken down by option strategy we'll give you concrete guidelines on the best exit points and prices for each trade type to maximize your win rate and profits long-term.
  • 7-Step Trade Entry Checklist [10 Pages]Our top 7 things you should be double-checking before you enter your next trading. This quick checklist will help keep you out of harms way by making sure you make smarter entries.

Real-Money, LIVE Trading:

  • IWM Iron Butterfly (Closing Trade): Exiting this IWM iron butterfly options trade gave us a $1,100+ profit after pinning the stock price one day before expiration at the peak of our spread.
  • CMG Iron Condor (Opening Trade): I just recorded my live trading platform (and real money account) as I walked through the process of entering a new iron condor trade in CMG stock. Inside you'll see me analyze, price and fill the trade in real-time.
  • APC Strangle (Closing Trade): Took about $150 out of this small APC strangle trade even after the stock moved completely against our short call strikes this month. But as always, implied volatility always trumps direction and because IV went down, the value of this spread dropped more-so than the impact of the directional move higher.
  • IYR Call Credit Spread (Adjusting Trade): This adjustment is good for 2 reasons. First, it reduces the overall risk in the trade if IYR continues to move higher. Second, it still leaves room for the stock to fall back down into our new profit window.
  • XHB Straddle (Closing Trade): We were able to bank a $120 profit early in the March expiration cycle for our XHB straddle with the stock trading right in the middle of our expected range.
  • AAPL Call Calendar (Opening Trade): Look behind the scenes as I use our new watchlist software to filter quickly and find this AAPL call calendar spread trade during overall low implied volatility in the market.
  • COF Strangle (Adjusting Trade): Here I recorded my live trading screen (and real money account) showing you the entire thought process we used to make an adjustment to my current short strangle in COF to reduce risk.
  • GDX Strangle (Opening Trade): With gold's high IV we are getting into a new strangle with a 70% chance of success and a decent credit for selling option premium.
  • IBB Iron Condor (Closing Trade): Today we're exiting an iron condor we traded in IBB for a $142 profit. Inside you'll see me analyze the exit price and fill the trade in real-time.

Thank You for Listening!

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About The Author

Kirk Du Plessis

Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. In 2018, Option Alpha hit the Inc. 500 list at #215 as one of the fastest growing private companies in the US. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D.C., he's a Full-time Options Trader and Real Estate Investor. He's been interviewed on dozens of investing websites/podcasts and he's been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and three children.