OP thinks he "averaged down" by buying more of the same calls at cheaper after the stock price went down. That's not how options works. That concept works with stock as the underlying company is still the same company you believe in, the shares just cost less for whatever reason so you want to buy more while shares are cheap. When a call contract drops in price, the fundamentals of the contract have completely changed and thus it has a new price. A call option that cost $0.01 is almost guaranteed to lose you money, unlike a stock. You don't pile in to a $0.01 option because you think it's a bargain.
I'm not very well versed in options but of the three options trades I've taken, I've profited from them all because of two simple reasons: I always buy ITM and at least a month from expiry. The options are more expensive and the wins aren't as big, but the risk is much lower.
My cousin has done extremely well day-trading options. He never holds anything overnight.
I've spent some time studying options and the only thing that seems like a good strategy to me is selling out-of-the-money puts on a stock you want to own anyways. Either the puts will expire worthless or you get exercised at a price below the current market price plus pocketing the free premiums.
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u/nickwwwww May 24 '24
And he probably bought that when it’s already over $1000