With the rising popularity of equities market trading following the COVID-19 pandemic, it was practically inevitable that interest would boom toward the options space. In many ways, options represent a market within a market. Since the underlying contracts exchange hands at a fraction of the rate of the actual security, the leverage can be tremendous.
At the same time, unlike securities in the open market, options expire. So while there are incredible rewards to be had, the debit that you put can be completely nuked in a busted transaction. Even worse, in a credit-based position, tail risk — which is the phenomenon where you must make good on the risk you underwrote — can potentially beat your portfolio to a pulp.
