Options Trading Mistakes: Six, Priced From 10 Real Option Chains
Options trading mistakes are errors that come from how an option contract works rather than from the market call: paying a wide spread, buying cheap far-away strikes, holding through time decay or an earnings release, and forgetting assignment. Each has a measurable price.
Options trading mistakes are the errors that come from the contract itself rather than from the market call: paying a wide spread, buying cheap far-away strikes, holding through decay or an earnings release, and forgetting that a short option can be assigned. Each one has a price you can read off a real option chain before you trade, and this page reads it from ten of them.
How it works
A share has one price that matters. An option has at least four. There is the premium, the gap between the bid and the ask, the amount the premium shrinks each day, and the part of the premium that pays for the market’s expected move. A correct view on direction can still lose money if any of the other three goes against you.
That is why the list below is different from the general common trading mistakes list. Position size still matters most, and the options basics page covers why an option does not move one-for-one with its stock. The mistakes here are the ones only an options trader can make, and each links to the page that explains its mechanism in full.
The data comes from one snapshot. Cboe’s delayed quotes for SPY, QQQ, IWM, AAPL, MSFT, NVDA, AMZN, META, TSLA and AMD were saved after the close on Friday 25 September 2026: 64,358 listed series, of which 61,564 expired after that day.
The pricing mistakes: spreads, cheap strikes and earnings
Mistake 1: ignoring the spread. A bid-ask spread on an option is paid on a premium, not on the share price, so a few cents can be a large slice of what you paid. Across the 57,198 series with both a bid and an ask, the median spread was 2.7% of the midpoint for options priced at $20 and up, 4.3% for $2 to $4.99, and 6.5% for $0.50 to $1.99.
Mistake 2: buying the cheapest strikes. For options priced under $0.50 the median spread was 40.0% of the midpoint, and 35.3% among the ones that actually traded that day.
Buy one of those at the ask and sell it straight back at the bid, and a typical contract gives up well over a third of its value without the stock moving at all. These are not fringe contracts: they took 22.7% of all the contracts traded in quoted series on 25 September.
Mistake 3: buying what nobody bids for. 4,366 of the 61,564 series expiring after 25 September, 7.1%, had no bid at all. For AAPL the share was 15.5% and for META 14.3%; for QQQ it was 2.5%.
On the day itself, 34,134 of the 64,358 listed series, 53.0%, did not trade a single contract.
A strike with no trades and no bid still shows a price on the chain; there is simply no one quoting to buy it. The open interest column is the quick check for whether anyone holds it.
Mistake 4: buying just before earnings. The expected move is priced in, and it drains away once the news is out. The IV crush page measures that drop on real earnings releases and finds it is the usual result rather than an unlucky one. That is how a buyer can be right on direction and still see the option lose value the morning after.
The clock mistakes: decay, expiry and assignment
Mistake 5: holding short-dated options as if time were free. Theta is the amount a premium is expected to shrink per day with nothing else changing. For near-the-money calls and puts (delta between 0.45 and 0.55, ignoring the sign) in the ten chains, Cboe’s own theta was a median 9.42% of the option’s price per day with 1 to 7 days left.
It was 3.66% at 8 to 30 days, 0.93% at 31 to 90 days, 0.27% at 91 to 365 days and 0.08% beyond a year. These are different contracts compared on the same evening, not one option followed through time, but the pattern says the final week is where decay runs fastest.
Mistake 6: forgetting what happens at the end. FINRA’s investor page says that, generally, standardized equity options that are in the money are exercised automatically at expiration, and for a call the money to buy the shares falls due then. It also warns that brokerage firms can set different exercise cut-off times.
A seller faces the other side of that: FINRA notes that only about 7% of options positions are typically exercised, yet a seller of American-style options may be assigned on some, all or none of their short positions, on any day the market is open. The assignment page walks through what that leaves in the account.
Two more official warnings belong on this list. FINRA’s 2026 piece on same-day options says that for physically settled options, which covers most options on stocks, a firm may liquidate a position before the regular session closes if the account lacks the funds or shares to meet an in-the-money exercise, and the order it places may limit profits or lead to losses.
And the SEC’s investor bulletin states plainly that option holders risk the whole premium, while writers of some contracts face unlimited potential losses. The options expiry page covers the final day in detail.
A worked example
Two SPY calls from the saved chain, both expiring on Monday 28 September 2026, three calendar days after SPY closed at $771.35 on the Friday.
The cheap one: the $778 strike. Bid $0.27, ask $0.28. One contract bought at the ask costs $0.28 × 100 = $28. Selling it back at the bid returns $27, so the spread alone is $1, or 3.6% of the midpoint. That is a tight spread for a cheap option, because SPY had the busiest of the ten chains that day.
To be worth anything at expiry SPY has to finish above $778.28, which is 0.90% above Friday’s close. Cboe gave the contract a theta of −$0.1521 a day, which is 54.3% of the $0.28 ask.
The near-the-money one: the $771 strike. Bid $2.33, ask $2.34, so $234 a contract and the same $1 spread. Break-even at expiry is $771 + $2.34 = $773.34, only 0.26% above the close. Its theta was −$0.3983 a day: more dollars than the cheap call, but 17.0% of the $2.34 ask instead of 54.3%.
What the arithmetic says. The $28 contract looks like the smaller risk, and in dollars it is. But it needs a move about 3.5 times as large to reach break-even, and Cboe’s theta puts one day of expected decay at more than half of its price. The low price is what makes it attractive, and the low price is also why every fixed cost weighs so much more on it.
The original data
44 of the 24,971 trading and investing videos measured for this site have “options trading mistake” or “options mistake” in the title, from 38 channels, at a median of about 1,744 views. The wider phrase “options trading” appears in 279 titles at a median of 19,999, so the mistakes angle is covered thinly compared with the subject as a whole.
The chain figures above are new to this site. They come from Cboe’s delayed quotes for ten underlyings saved after the 25 September 2026 close. The spread figures use only the 57,198 series that expired after that day and had both a bid and an ask; the spread is the ask minus the bid, as a share of the midpoint.
Read it as a cost schedule rather than a ranking of good and bad options. The spread in dollars actually grows with price, from a median of $0.02 under $0.50 to $3.75 at $20 and up. What shrinks is its weight against what you paid.
Every group, with its count of series and contracts, is in the spread table.
The decay figures use the near-the-money series only, calls and puts with a delta between 0.45 and 0.55 either way, and take theta exactly as Cboe published it, divided by each option’s midpoint.
Each group is a different set of contracts on the same evening, so the chart compares expiries side by side rather than tracking one option as it ages. The group sizes run from 131 series in the final week to 792 beyond a year, and each group’s median price and median dollar theta sit in the theta table.
The question: Cheap call, three days left. Worth it?
Only if the move you expect is bigger than what the chain says the contract will lose. For the $778 call that meant beating a 0.90% break-even while one day of theta was worth over half the price. Put the spread and one day of theta next to your expected move before the order, not after it.
When it fails
This is one evening’s snapshot. The quotes were saved after the close, and closing quotes can be wider or narrower than those available during the session. A busier or quieter day would move every percentage, though the shape, with cheap options paying the heaviest spread, is a direct result of the arithmetic.
Theta is a model output, not a promise. Cboe’s figure assumes nothing else changes. A sharp move or a jump in implied volatility can swamp a day’s decay in either direction, and over a weekend the calendar and the trading days disagree.
The ten underlyings are large, heavily traded names. Smaller stocks will usually show wider spreads and more strikes with no bid, so these numbers flatter the typical chain rather than exaggerate it.
Avoiding every mistake here does not make a trade profitable. It only stops the contract from taking its cut before the market has had its say. Direction, size and exit still decide the result.
Related
The bid-ask spread page is where the first two mistakes start, and theta explains the model behind the decay figures. IV crush has the full earnings study, and assignment covers the seller’s side of expiry in detail.
Before I buy any option I work out two numbers as a share of its price: the gap between the bid and the ask, and one day of theta. If either is bigger than the move I expect tomorrow, I leave it alone.
— Michael Whitman
This page is educational, not financial advice. Test every idea on your own charts before risking money.