Options risk flags

Leverage, decay, assignment, and liquidity — red flags to name early. Education only — not a recommendation to buy, sell, or hold anything.

Leverage cuts both ways

Small premium can control large notional — gains and losses (especially for sellers) can surprise. Position size literacy matters more than clever strikes.

Decay and timing

• Long options can bleed extrinsic value.
• Being “right eventually” can still lose if timing is wrong.

Assignment and exercise

Short options can be assigned. American-style can be early. Know the mechanical possibility before celebrating premium.

Liquidity and spreads

• Wide option markets = expensive round-trips.
• Complex legs multiply slippage risk.

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