I've heard many option traders say they would never do something: _never buy really out-of-the-money options, _never sell in-the-money options. These absolutes seem silly — until you find yourself in a trade that's moved against you.
All seasoned options traders have been there. Facing this scenario, you're often tempted to break all kinds of personal rules, simply to keep on trading the same option you started with. Wouldn't it be nicer if the entire market was wrong, not you?
As a stock trader, you've probably heard a similar justification for doubling up to catch up: if you liked the stock at 80 when you bought it, you've got to love it at 50. It can be tempting to buy more and lower the net cost basis on the trade. Be wary, though: What makes sense for stocks might not fly in the options world.
How can you trade more informed?
Doubling up as an options strategy usually just doesn't make sense. Options are derivatives, which means their prices don't move the same or even have the same properties as the underlying stock. Time decay, whether good or bad for the position, always needs to be factored into your plans.
When things change in your trade and you're contemplating the previously unthinkable, just step back and ask yourself: Is this a move I'd have taken when I first opened this position? If the answer is no, then don't do it. Close the trade, cut your losses, or find a different opportunity that makes sense now. Options offer great possibilities for leverage on relatively low capital, but they can blow up just as quickly as any position if you dig yourself deeper. Take a small loss when it offers you a chance of avoiding a catastrophe later.