Normal
Why do you watch the chart of the underlying then?Though your maximum exposure is the cost of the option, the way you trade, your exposure is a massive (perhaps 100%) proportion of your capital.As you point out, if it moves against you to some defined point, you exit. Likewise with CFDs or stocks. So talk of $3000 risk opposed to 80 odd thousand or whatever it was is a nonsense in the the daytrading context.Risk is defined by total delta position plus contest risk.That additional contest risk means that your option position has to move several points, much more than a stock/cfd position, just to break even.
Why do you watch the chart of the underlying then?
Though your maximum exposure is the cost of the option, the way you trade, your exposure is a massive (perhaps 100%) proportion of your capital.
As you point out, if it moves against you to some defined point, you exit. Likewise with CFDs or stocks. So talk of $3000 risk opposed to 80 odd thousand or whatever it was is a nonsense in the the daytrading context.
Risk is defined by total delta position plus contest risk.
That additional contest risk means that your option position has to move several points, much more than a stock/cfd position, just to break even.
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