Unit 4 · Level 1 · Buying options well
The lottery-ticket trap
Far out-of-the-money weekly options are the scratch cards of finance: €0.10 a ticket, screenshots of 50x winners everywhere, and a quiet mountain of losers nobody posts. The overwhelming majority of far-OTM weeklies expire worth exactly zero. The price is low because the odds are low, and the market did that math before you arrived.
Free to play. No ads, no token, no account needed to start.
What you get asked
Why do far-OTM weekly options usually expire worthless?
Three forces stack against you before the trade even starts: a distant strike, a tiny time window, and theta melting at full speed.
A €0.10 option isn't cheap if its chance of paying off is ___.
Cheap means underpriced relative to the odds, not just a small number. A low premium on a long shot can still be expensive.
Put the anatomy of the lottery-ticket trap in order.
Notice the cruellest part: the trader was RIGHT about direction and still lost everything. Far-OTM strikes demand miracles, not just correctness.
What does the rock-bottom price of a far-OTM option actually reflect?
Delta near zero is the market saying 'probably not'. You can disagree, but know that's the bet you're making.
Occasional 100x winners go viral on social media. Why doesn't that redeem the strategy?
Run the expectancy math from the Trading course: many small guaranteed losses versus a rare jackpot usually nets out negative. Casinos post their winners in the lobby too. 🐜
The rest of this unit
Defined risk, lottery tickets and IV crush: buy movement without burning the account.