The Investment Thread
refresh me since i dont dabble in options....
you bought say 100 puts of GME to sell at $160 on 12/8 - like a month ago and betting the price on 12/8 ( strike date? ) will be lower than the put amt of $160?
based on this chart ( right side ) - i buy 100 puts @170 for 12/10 for $10.65 per- thats $1065. If the price of GME on 12/10 is $140....i can sell my 100 shares at $170...which is a gross profit of 3000 or net of $1935 ( minus the $1065 cost ) - correct?
https://www.optionistics.com/quotes/stock-option-chains/GME
Yes. I usually only buy the shorter term options and I'll usually straddle or play both sides.
For GME I just bought puts, Grabbed the $160 put and at the time the stock price was around $185. I also bought a short contract length which made the options cheap. These are higher risk because you are basically betting the stock is going to make a large swing rather quickly. Given how the meme stocks and crypto are performing over the past few weeks I felt pretty good about my bet and expect a continuation of those unwinding. So I waited for GME to fall to a nice technical point where it hit support and sold for a really nice profit.
For TSLA I bought short term calls last week when I felt Omicron was being over blown and the market took a big dive. However, I also thought there were underlying conditions that could make the market keep going down. So I bought short term call options expecting TSLA to bounce to the $1060 range when the stock was in the upper $980's. Also looking at the 1 year chart I saw some bearish signals that the price was likely to retest support around $900 in the coming weeks. So after that one day TSLA ran up big I bought some January put options for $910. I fully expected to lose some money on that put the last two days but it was going to lose at a slower rate than the shorter term call options would gain. It hit $1060, I sold my call options for a nice profit. Today, TSLA ran down big and my put options are now worth well more than I paid for them. I do think TSLA is going to run down some more so I'm going to hold those put options. However, I may lock in some profits by purchasing some shorter term TSLA calls again.
In order for plays like this to work you must have volatility. There are windows in which you can lose but the losses are limited. Straddling is simply buying the dips, selling the peaks but having positions during the ride each way. If the market makes massive moves like a 20% up or down week then you are going to make a lot of money regardless of the direction. Next you can mix in some leveraged ETF stocks to reduce the risk some more. Say you want to bet against TSLA but you are scared of a broader rally. You can buy the TSLA put and then turn around and by a leveraged index. If the market goes up you can adjust how much you want to make or lose using those ETF's. If the market indeed rallies and TSLA goes down then you just make a killing. If the whole market goes down then your option will pull a ton of weight and percetage of investment in those ETF's will dictate how much you make/lose. The only way you don't make money is sideways movement and the amount you make/lose just depends on how far you reached on your options. If you have volatility, you understand basic technicals and you can nearly constantly watch the markets it's an easy play. I try to snipe 4-6% in moves but the past couple of weeks it's been much higher, some luck, some skill. From these moves, even if my put options in TSLA expire out of the money, I'm still up for the whole play. However, if the market decides to just flat out crash then I'll make huge gains with almost all of my cash on the sidelines.
There are so many ways to make easier gains in the market since Covid but I just don't trust it and think we're looking at a massive bubble so don't want to get caught long when it crashes because it's going to be brutal and want to have liquiditiy to buy whenever it does finally happen.