AI Trading: Lesson Learned #126: Critical Position Review - Expired Options and Missing Stop-Losses

Lesson Learned #126: Critical Position Review - Expired Options and Missing Stop-Losses

Date: January 9, 2026
Severity: P0 - CRITICAL
Category: Risk Management

Problem Statement

Deep analysis on Jan 9, 2026 revealed critical risk management gaps:

1. INTC260109P00035000 EXPIRED TODAY - If INTC < $35 at close, we're assigned 200 shares ($7,000 liability)
2. 4 short put options have NO stop-losses
3. 21.62 SPY shares have NO trailing stop
4. Avg return is -6.97% despite 80% "win rate"

Open Positions at Risk

Position	Type	Risk	Stop-Loss
SPY 21.62 shares	Long	-$74.60 potential	NONE
INTC260109P00035000 -2	Short Put	EXPIRED TODAY	NONE
SOFI260123P00024000 -1	Short Put	$2,400 assignment risk	NONE
AMD260116P00200000 -1	Short Put	$20,000 assignment risk	NONE
SPY260123P00660000 -1	Short Put	$66,000 assignment risk	NONE

Root Cause

1. Risk controls exist in CODE but weren't applied to EXISTING positions
2. Positions opened before stop-loss implementation (pre-Jan 9, 2026)
3. No daily position audit to verify protection

Immediate Actions Required

1. Check INTC assignment status - Did we get assigned 200 shares?
2. Set trailing stops on ALL open positions via set-trailing-stops CI task
3. Review and potentially close short puts before further expiration

Prevention

1. Daily pre-market: Run position audit script
2. Every new position: Verify stop-loss set immediately
3. Weekly: Review all open options for expiration risk

Phil Town Rule #1 Violation

This violates "Don't Lose Money" - we have unlimited downside risk on short puts without protection.

Tags

risk-management #options #stop-loss #p0-critical #phil-town

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