Key Takeaways:
- Understand the full set of Greeks, not just delta
- Stop overtrading weeklies without a reason
- Roll with purpose, not panic
- Respect liquidity and OI before entering trades
- Know what makes up your option’s price
You’ve mastered the basics of crypto options. You can place a trade, read an option chain, and maybe even toss around terms like delta and IV.
But this is where many traders slip. Intermediate traders often overestimate their skill, fall into risky habits, and leave profit on the table.
In this guide, we’ll explore the most common crypto options trading mistakes, and show you how to avoid them before they eat into your profits.
1. Ignoring the Options Greeks Beyond Delta
What Happens
Traders focus heavily on delta (directional movement) but ignore theta, gamma, and vega, which influence time decay and volatility sensitivity.
Real Impact
- You lose value due to theta decay and don’t know why
- Unexpected volatility crushes your premium
- You misprice risks and rewards
How to Fix It
- Use Pi42’s Options Greeks Dashboard
- Understand how time (theta) affects short-term options
- Watch vega during macro news or high IV environments
💡 Tip: Avoid buying near-expiry options in low-volatility environments, theta eats them alive.
2. Overtrading Weekly Expiries
What Happens
Intermediate traders love the adrenaline of short-dated options but forget that time is a cost.
Real Impact
- Constant theta decay with little price movement
- Higher spread/slippage risk on low liquidity strikes
- Psychological burnout from frequent trades
How to Fix It
- Mix weeklies with monthly expiries for stability
- Only trade short-dated options near catalysts (e.g., BTC ETF news)
💡 Tip: Treat time as a resource, not just an expiry countdown. Overusing weekly contracts is one of the biggest crypto options trading mistakes to avoid.
3. Rolling Too Late (or Not at All)
What Happens
Many traders let options expire worthless or panic-roll after losing premium, instead of planning ahead.
Real Impact
- Wasted capital and missed upside
- Volatile last-minute moves hurt execution
How to Fix It
- Set reminders 24 to 48 hours before expiry
- Roll profitable trades early to lock gains
💡 Tip: Always compare IV and liquidity across expiries before rolling. Not planning ahead is a costly crypto options trading mistake.
4. Misunderstanding Open Interest and Liquidity
What Happens
Traders jump into low OI strikes without realising how hard it will be to exit later.
Real Impact
- Big slippage when closing positions
- No counterparties = stuck trades
How to Fix It
- Only trade strikes with healthy OI and tight bid-ask spreads
- Use Pi42’s liquidity heatmap for better strike selection
💡 Tip: Liquidity should guide your strike choice, not just your directional view. Ignoring OI is a common options trading mistake in crypto markets.
Expand Your Knowledge: Understanding Crypto Options Liquidity and Slippage: Orderbooks Explained
5. Confusing Intrinsic vs. Extrinsic Value
What Happens
You buy deep OTM options expecting massive moves, not realizing they are 100% extrinsic (i.e., premium risk).
Real Impact
- Premium decay wipes you out
- You hold “lottery tickets” with no value left
How to Fix It
- Learn to calculate break-even for every trade
- Know how much time value you’re paying for
- Favor ATM options with better risk-reward unless you’re hedging
💡 Tip: Deep OTM contracts look cheap, but chasing them is one of the worst crypto options trading mistakes.
Conclusion: Get Over the Intermediate Hump
Intermediate traders are dangerously confident, but awareness is power. By fixing these five options trading mistakes, you’ll:
- Save money on premium
- Improve execution timing
- Read the market like a pro
Avoiding these options trading mistakes will help you level up faster. Ready to improve? Pi42 gives you pro-level tools to trade smarter and avoid pitfalls.
Frequently Asked Questions
What are the most common options trading mistakes?
The most common options trading mistakes include ignoring the Greeks beyond delta, overtrading weekly expiries, rolling contracts too late, misunderstanding liquidity and open interest, and confusing intrinsic vs. extrinsic value.
What are crypto options trading mistakes specific to beginners and intermediates?
Some common crypto options trading mistakes include chasing low-liquidity strikes, ignoring implied volatility shifts, and overusing weekly contracts. Unlike stocks, crypto options often have higher volatility and settlement rules that make these mistakes more costly.
What is the biggest options trading mistake in crypto markets?
The biggest options trading mistake in crypto is ignoring liquidity and open interest when selecting strikes. Without enough counterparties, you can get stuck in a trade or suffer heavy slippage when closing.
How can I fix my options trading mistakes quickly?
To fix options trading mistakes, start by reviewing your trade logs, checking Greeks beyond delta, balancing weekly and monthly expiries, and focusing only on liquid strikes. Even small adjustments in timing and planning can reduce losses and improve long-term performance.
Keep Learning:
What are Call and Put Options in Crypto
Option Premium in Crypto: What Are You Really Paying For?
Multi-Leg Option Strategies in Crypto