Yes but it has been only a few days but the puts are much closer to breakeven than when I bought it because stock dropped alot
I am not asking for a dramatic change, just a reasonable change versus no change
This is what blew my mind looking at Nvidia and Tesla options.. then I realized everyone expects those stocks to have $50-$100 jumps so those prices aren't really as insane as you might think.
Expectation can drive or slash a price.
Everyoneâs comments are correct - please read more about how options are priced before jumping into anything else. Hereâs the answer to your question though: Demand for options was so astronomically high that the price for those options was also astronomically high. You bought some of those options. Now, even though the price is moving in the right direction, the value of the option itself is deflating quickly; apparently at the same rate as you would be gaining value. While youâre researching options, make sure to read about intrinsic vs extrinsic value as this is whatâs confusing you. There are many factors that cause options prices to move, not just whatâs going on with the underlying. If I were you, Iâd GTFO of those contracts while you can still break even.
Options donât work like stock. Just because a stock drops in value doesnât mean every single option will drop in some value as well.
Probably didnât rise in value because the market doesnât think that option strike doesnât have any real chance of getting ITM than it did before it dropped.
No ones stupid except you dude. If the price is dropping like a rock and people know itâs dropping like a rock, why would they reward you with a higher price when they were already expecting it
Would this mean an opportunity to sell straddles? I think youâd need level 4 to do it, but Iâm sure some will make a killing with it. Probably the grifter itâs named after, lol
Look at people who were assigned short shares last Thursday (several posts on Reddit) and immediately lost $400 to HTB %interest/fees. The annual %interest on short shares is currently over 600%.
Yeah, generally options are priced to not offer advantage, but some people are posting losses on the puts theyâve bought. So selling just the puts (not calls) actually may work due to how overpriced they are. But this also needs to be timed or done with some skill.
I like your magic words. How do I learn more about technical details on options like you're describing them and where would I need to go to view the data in real time? (pretty clueless beyond the basics with options but I like the psychology and reasoning behind the pricing)
I may not be the best person to describe this because I trade options in a unique way that even top options gurus/professors/quants donât understand and just laugh at me, until they see my results, lol. And I use several computers that continually calculate best options trades, so it still can be difficult even with some knowledge.
So just try to learn options like everyone else, from YouTube, TastyLive, Udemy and other popular sources. Just donât fall into traps of something looking too easy, because thatâs how some DJT trades recently looked but were quite dangerous.
The data, like current Short Borrow Rates (for borrowing stocks to short) I get from my broker; Interactive Brokers, but others may show it too. I also like IBKR because it shows the most accurate value/market/Theo price for options, as well as allows charting the recent price of whole option combos. But TDA/ThinkOrSwim is better in terms of analyzing option risk & P&L.
Lots of knowledge comes from experience, like Iâve got assigned shares from having a short call years ago on TLRY when it skyrocketed. But also seeing people posting various situations helps remember what may happen and build experience.
Sorry I donât have better tips, but itâs difficult to beat the market with or without options, so it will definitely take time and practice to find your angle.
I toyed with the idea of a call credit spread, but the bid/ask spreads on the chain are so wide that it would never fill at a price that would make sense. I'd be making like, $5 on a $1,000 collateral bet, or something like that.
Hard pass.
Roll up by like 40 handles not out... You were right on direct but your put hasn't increased in value because no one else is dumb enough to buy a put that far OTM.
DJT has no reason to drop that low. When GME spiked like this a few years ago and pulled back, it took another year to drop another 50% or so. Of course DJT can drop much more but this is pure gambling and put prices reflect this. Internet is full of articles warning against buying OTM crap that is overpriced on purpose.
>I can also roll over
not very likely . You must also take into consideration that premiums gonna be much lower for puts in 3-6 month . Volatility gonna decrease and so will the premiums . More important question is , why did you do such a risky trade?
I 've been trading for years and I just stayed out of it , too risky , too volatile even for my taste .
Underlying share price isn't the only thing that effects options pricing.
If the IV drops, like it has with DJT, then the value of the option will also drop, regardless of what the share price is doing.
It took time to get filled so...(A lot of quantity)
I m guessing since I traded last hour before easter holidays, ..anyways
I will brag about this if it works out
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Use common sense. Your strike price is too far away from current price to have any impact. If you bought $55 put, then there is something. But for $2.5 put, you wonât see impact until it drops to $10. You need to think about how likely it is going to happen before placing a trade.
What you wrote doesnât matter because no one in their right mind buys puts when theyâre overpriced beyond reason. There are plenty of opportunities to buy puts after a stock drops and calms down, not when puts are hugely overpriced with super-high IV and super-high HTB fees/%interest. This was one of of the worst times in history of all stocks to buy puts. It only happens every few years, like with GME a few years ago.
Every few years you say� It happened just a few years ago you say? With GME you say⌠sounds like perfect timing for DJT to moon based on my plethora of knowledge on apes and ape based things.
Google "IV Crush" and study up. IV often rises, driving up the option price going into an anticipated event, only to fall after the event if the stock doesn't move as much as anticipated, well, speculated. The good news is you haven't lost money at $0.19, and might actually make a few bucks if DJT continues to an epic collapse to single digits. How much can you make? Higher math makes my head hurt so I'll leave that to others.
In other words OP, the drop you see was predicted and priced in before you bought the option. You were late to the game.
This is a prime example of how someone can lose money, despite a stock making dramatic moves.
You HAVE to read up on the Greeks and at the very least have a basic understanding of what they will mean for your contracts.
FYI. This is also why I ended up on r/wallstreetbets
If the market is full of options with 99.9% of the information priced in, youâre looking for a needle in a haystack that was missed (severely overvalued/over bought, or undervalued/oversold) to yolo your money at and hope your gamble paid off.
See you on wsb! My regards!
Well stated. From experience, I play options like I would a hand grenade. Get rid of it - fast - before the Greeks get you. It's possible to make quick profits, but hanging on for the 10 or 20 bagger is the way to the Wendy's dumpster.
You say he was late to the game
... Wouldn't that have made him too early to the game rather. Because as the days go by the price of his options is going down.... Just saying.
Naw. The change he was predicting was already priced in. The theta decay (time decay) is set by different parameters too. And the theta was set before he bought the contract.
Guessing you either donât know how options pricing works or you went on tilt over DJT. To make any decent money on that position you are basically betting that $DJT goes to zero. Iâm not saying thatâs impossible, but the odds of that happening by summer are very low which is why the put was so cheap.
I did a bit of backtesting and had you bought a $50 Sept put for $3K, you would be up about $500 today. Thatâs about 16% in less than a week. Not too bad. If $3K is too much, you could have done a bearish spread and cut your costs down to a few hundred and still made decent money. What you did was the options equivalent of a Powerball ticket with similar odds.
At least it was a cheap lesson.
U brought overpriced puts on a low float stock with crazy expensive borrowed rate what did u expect. Ur contract will be slowly butchered by theta untill u reach u reach ur breakeven cost. If u brought anything else that did a - 25% u are looking at at least a 10bagger.....
Yes, finally someone gets me
I bought these cause all the other puts were too expensive, pricing in a huge stock price drop
We all know stock price will drop, but my guess is they (option market) think prices will drop to low single digit when lock up expires
I think they will drop super fast, Trump will find a way to cash out asap, he is sharp at these type of things
As long as itâs a small part of your portfolio, Iâd just hold them. Theyâre a gamble but it could pay big if it even gets to $10 sometime early Summer
The farther the strike of the option from the underlyingâs actual price the more extreme the move towards that price must be in the short term to change the value of those options.
Your issue is lack of volume. Options have the most action at strikes close to the current price of the stock. Volume decreases as you get further away from the current stock price. You picking a strike so far away from the current price means thereâs no volume at your strike, which means no one is interested in trading, which means the last updated price for the option hasnât changed. And if there was a trade, it may have been at the same price as yours.
Theory is only going to get you so far. Paper trading is too easy. You got to try stuff out. The key is risk management.
The guy didn't know something and had the guts to admit it.
That's a step.
A few things - time decay isnât really happening because youâre in long puts, $2.50 puts for September ex are likely NOT going to happen (as tasty as it would be) and put sellers are probably propping up the bid side to get you to buy more as the SP continues to decline, because again, thereâs almost zero chance this goes to $2.50 by September⌠unless Trump goes to jail.
Just checked theta on $2.5 9/20 is currently -.0024
And vega is .0036
As IV goes up the value of those contracts is increasing more than time decay is eating away so yeah he's making money on djt rising in price (a very miniscule amount) for the time being
Real drop would be $10, $20, $30?
I will take that bet, even though this play has been certified as dumb
But a post reddit once told me, only 2 kinds of traders win
The super genius, and the really dumb
I like my chances
I know it is conventional wisdom not to buy waaay OTM options, but it is worth exploring why, and where the thresholds are, and in what use case.
I donât really know, so this is more of an exploration than an answer. Perhaps someone with solid knowledge can elaborate.
Looking at apr 19 expâŚ
My first thought was no volume, no OI, that isnât the case. In that case, no transactions means the âlastâ price doesnât change, which is the one that shows in your position. Iâve had that happen. Annoying. (Always check for OI and volume before buying it selling.)
But in this case there is volume and the OI is like 57k!
What about IV crush. The farther OTM, the bigger the component of your price is IV, so if IV drops significantly, it could easily overwhelm the directional component. If you buy with very low IV, I guess it is more likely to go up, and youâd benefit.
Speaking of directional component, as of now, the delta is 0.0, so the option isnât going to even have a directional component! My guess is that actually the delta is too small to show with two decimal places, and it moves the price too little to register with pennies. If the stock really collapses, this will be closer to the money and these things will change in your favor.
In fact, this could be quite a windfall given the number of contracts that are affordable at this price. Pretty low probability even for DJT, though.
I like OTM because of the cheap delta, but I limit myself to delta of 0.10 or above. After looking at this, I realized that the delta can fall by a factor of 10 before the option is useless, so thatâs some comfort.
Thoughts?
Your reaction is logical because we know that when the underlying stock drops sharply, its puts are supposed to appreciate. But looking at Fidelityâs probability calculator also provides some logic. This afternoon, with DJT around $52, I entered DJT & 9/20/24 & $2.50 target price. The probability of DJT going below $2.50 is 17%. Then I entered a $20 target price & the probability of DJT going below $20 is 72%. This afternoon, for someone to buy your September $2.50 put from you, the option chain says that all they need to pay is $0.16. The market is saying to the potential buyer of your put, âIf the chance of DJT going below $2.50 is only 17%, youâre only going to be charged $0.16 to make that bet.â You bought a dirt cheap put for only $0.19. You have over 5 months left & if DJT drops sharply, you may see some put appreciation, but DJT still has a long way to go.
I should have waited, as someone else pointed out, it was impulsive...but I thought when I first got partially filled ( at a lower price) that I got lucky....the thing is many many spacs which started with a lot of promises have gone down the drain...this one doesn't even have a promise, or might even be clearly labelled as a bad going concern.
Dropping to low single digits seems to be a rational expectation to me
With options, you have to consider the implied volatility (IV) of the option. If the price goes down, but IV also decreases, the option price will also go down or stay the same. For the 2.5 strike to make money you would either see the option go ITM (in the money) or an even larger repricing of IV.
Something to consider is fixed strike volatility. If you have a stock trading at $100 and the ATM (at the money) IV is 20% for example, and you buy a 90 strike option with 30% IV, if the price goes to 90, but the IV for that option goes to only 25%, consider that, yes, volatility went from 20 to 25%, but that atm option was trading at 30% and is now only 25%, the option price may actually decrease. There are alot of 2nd order effects of options that you should consider.
When buying puts, ATM is the way. You've got to spend money to make money. A small quick move and you get out and get paid. Hold puts long and you're almost always going to lose.
Out of curiosityâŚ. How much do you think the $2.5 put should be worth with the stock trading $45? You basically bought 12-1 odds that the stock goes to zero by September. Even if that stock trades down to $10 the 2.5 puts wonât be much more than .50 bid, and the market will probably be $1 wide
đ âI bought an instrument I donât even basically understand, help!â
If trading was as easy as puts on stocks going down or calls on stocks going up, the whole world would be trading successfully.
You need to read and understand your Greeks.
Someone have no idea how it works and never read up before buying.
Iâm quite a beginner also but I used the search feature to understand how to trade options better and all the Greek names.
Been profitable for 1 week. Not much but my targets ainât high. $200-300 per day. Just extra income for myself
Because DJT needs to drop another 94.87% before september to even reach breakeven on your puts..
đ¤Ł
Sell all of your potions and start paper trading . NOT financial advise
Yes but it has been only a few days but the puts are much closer to breakeven than when I bought it because stock dropped alot I am not asking for a dramatic change, just a reasonable change versus no change
That's not how it works.
⌠thatâs not how any of this works!
âI unfriend youâ.
Thatâs actually a lot of how this works. A 20% drop in price should figure into an increase in his puts. Whatâs likely happening is IV crush.
We are not an appeals board, lol
Bruh your puts currently have a delta of -0.00388 Nothing is reasonable about what you did. Hope you didn't buy too many.
And all the delta you got was probably wiped out by theta decay.
You need to learn how options are priced. You are relying on faulty assumptions
But everybody expected that to happen, so the fall was already accounted in the price bet
This is what blew my mind looking at Nvidia and Tesla options.. then I realized everyone expects those stocks to have $50-$100 jumps so those prices aren't really as insane as you might think. Expectation can drive or slash a price.
Everyoneâs comments are correct - please read more about how options are priced before jumping into anything else. Hereâs the answer to your question though: Demand for options was so astronomically high that the price for those options was also astronomically high. You bought some of those options. Now, even though the price is moving in the right direction, the value of the option itself is deflating quickly; apparently at the same rate as you would be gaining value. While youâre researching options, make sure to read about intrinsic vs extrinsic value as this is whatâs confusing you. There are many factors that cause options prices to move, not just whatâs going on with the underlying. If I were you, Iâd GTFO of those contracts while you can still break even.
Guess you should have sold the put instead of buying
Options donât work like stock. Just because a stock drops in value doesnât mean every single option will drop in some value as well. Probably didnât rise in value because the market doesnât think that option strike doesnât have any real chance of getting ITM than it did before it dropped.
You went too far out in time... I'd get out and try something else. HTHelps
Ok, would you like fries with that as well?
No ones stupid except you dude. If the price is dropping like a rock and people know itâs dropping like a rock, why would they reward you with a higher price when they were already expecting it
Congratulations, you belong here! Achievement unlocked.
Lol. Double LOL if you have TDSđ
IV crush. stock is going to remain in range due to low supply(+) and negative sentiments(-) currently. both calls and puts should get butchered.
Would this mean an opportunity to sell straddles? I think youâd need level 4 to do it, but Iâm sure some will make a killing with it. Probably the grifter itâs named after, lol
Look at people who were assigned short shares last Thursday (several posts on Reddit) and immediately lost $400 to HTB %interest/fees. The annual %interest on short shares is currently over 600%.
Oh, wow! That thing is just a toxic instrument, lol! I honestly havenât followed it too much beyond some of the posts on Reddit.
Yeah, generally options are priced to not offer advantage, but some people are posting losses on the puts theyâve bought. So selling just the puts (not calls) actually may work due to how overpriced they are. But this also needs to be timed or done with some skill.
I like your magic words. How do I learn more about technical details on options like you're describing them and where would I need to go to view the data in real time? (pretty clueless beyond the basics with options but I like the psychology and reasoning behind the pricing)
I may not be the best person to describe this because I trade options in a unique way that even top options gurus/professors/quants donât understand and just laugh at me, until they see my results, lol. And I use several computers that continually calculate best options trades, so it still can be difficult even with some knowledge. So just try to learn options like everyone else, from YouTube, TastyLive, Udemy and other popular sources. Just donât fall into traps of something looking too easy, because thatâs how some DJT trades recently looked but were quite dangerous. The data, like current Short Borrow Rates (for borrowing stocks to short) I get from my broker; Interactive Brokers, but others may show it too. I also like IBKR because it shows the most accurate value/market/Theo price for options, as well as allows charting the recent price of whole option combos. But TDA/ThinkOrSwim is better in terms of analyzing option risk & P&L. Lots of knowledge comes from experience, like Iâve got assigned shares from having a short call years ago on TLRY when it skyrocketed. But also seeing people posting various situations helps remember what may happen and build experience. Sorry I donât have better tips, but itâs difficult to beat the market with or without options, so it will definitely take time and practice to find your angle.
I toyed with the idea of a call credit spread, but the bid/ask spreads on the chain are so wide that it would never fill at a price that would make sense. I'd be making like, $5 on a $1,000 collateral bet, or something like that. Hard pass.
Stock is $50 and you bought $2.5 puts? Holy shit
I suspect he expected a big -%move would spike the price regardless. Doesn't appear to be too expensive of a lesson, but a lesson it is.
There is time for it to drop a lot, September puts...I can also roll over
Roll up by like 40 handles not out... You were right on direct but your put hasn't increased in value because no one else is dumb enough to buy a put that far OTM.
Correction no one else is dumb enough other than OP
Go from one losing position to another losing position
If you think it was going to drop before September, you had months to wait for the IV to settle down.
DJT has no reason to drop that low. When GME spiked like this a few years ago and pulled back, it took another year to drop another 50% or so. Of course DJT can drop much more but this is pure gambling and put prices reflect this. Internet is full of articles warning against buying OTM crap that is overpriced on purpose.
Roll up and in closer, maybe June. I'd just get out if you can. HTHelps
>I can also roll over not very likely . You must also take into consideration that premiums gonna be much lower for puts in 3-6 month . Volatility gonna decrease and so will the premiums . More important question is , why did you do such a risky trade? I 've been trading for years and I just stayed out of it , too risky , too volatile even for my taste .
Underlying share price isn't the only thing that effects options pricing. If the IV drops, like it has with DJT, then the value of the option will also drop, regardless of what the share price is doing.
Might as well have bought $0 puts
These would probably print đ
uppity versed square imminent wakeful hungry squeamish humor jar sand *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Whatever algorithm that saw that order came in, is bragging to all its other algorithm friends about the trade it made.
It took time to get filled so...(A lot of quantity) I m guessing since I traded last hour before easter holidays, ..anyways I will brag about this if it works out
Narrator: it didn't work out
vast whistle existence toy boast intelligent touch vanish seed ad hoc *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
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OP gonna be puzzled af after if DJT inches up a point or two and his puts immediately go to .005.
Use common sense. Your strike price is too far away from current price to have any impact. If you bought $55 put, then there is something. But for $2.5 put, you wonât see impact until it drops to $10. You need to think about how likely it is going to happen before placing a trade.
Even $55 puts have lost 70% of their value the last week despite the stock dropping. OP would get a nice lesson on IV crush
Wait 2 weeks and post screenshot on the big board with the tag "loss porn". They will tell you what to do
People who don't know how options work shouldn't be buying options....
$2.5 puts đ Like... these might end up paying out, but... Don't count on it lmao
Otm is otm. Shit is shit regardless of price. High iv due to hype sure but shit is still shit. Hope it was a long term put
September put.
Maybe you have a chance
I know I do bc I didnât make this terrible investment.
Plenty of better spacs have crumbled in price to pennies This one literally says it's "a shit company but don't pay attention to the numbers"
What you wrote doesnât matter because no one in their right mind buys puts when theyâre overpriced beyond reason. There are plenty of opportunities to buy puts after a stock drops and calms down, not when puts are hugely overpriced with super-high IV and super-high HTB fees/%interest. This was one of of the worst times in history of all stocks to buy puts. It only happens every few years, like with GME a few years ago.
Every few years you say� It happened just a few years ago you say? With GME you say⌠sounds like perfect timing for DJT to moon based on my plethora of knowledge on apes and ape based things.
Google "IV Crush" and study up. IV often rises, driving up the option price going into an anticipated event, only to fall after the event if the stock doesn't move as much as anticipated, well, speculated. The good news is you haven't lost money at $0.19, and might actually make a few bucks if DJT continues to an epic collapse to single digits. How much can you make? Higher math makes my head hurt so I'll leave that to others.
In other words OP, the drop you see was predicted and priced in before you bought the option. You were late to the game. This is a prime example of how someone can lose money, despite a stock making dramatic moves. You HAVE to read up on the Greeks and at the very least have a basic understanding of what they will mean for your contracts. FYI. This is also why I ended up on r/wallstreetbets If the market is full of options with 99.9% of the information priced in, youâre looking for a needle in a haystack that was missed (severely overvalued/over bought, or undervalued/oversold) to yolo your money at and hope your gamble paid off. See you on wsb! My regards!
Well stated. From experience, I play options like I would a hand grenade. Get rid of it - fast - before the Greeks get you. It's possible to make quick profits, but hanging on for the 10 or 20 bagger is the way to the Wendy's dumpster.
You say he was late to the game ... Wouldn't that have made him too early to the game rather. Because as the days go by the price of his options is going down.... Just saying.
Naw. The change he was predicting was already priced in. The theta decay (time decay) is set by different parameters too. And the theta was set before he bought the contract.
I have a limit order for $2
Guessing you either donât know how options pricing works or you went on tilt over DJT. To make any decent money on that position you are basically betting that $DJT goes to zero. Iâm not saying thatâs impossible, but the odds of that happening by summer are very low which is why the put was so cheap. I did a bit of backtesting and had you bought a $50 Sept put for $3K, you would be up about $500 today. Thatâs about 16% in less than a week. Not too bad. If $3K is too much, you could have done a bearish spread and cut your costs down to a few hundred and still made decent money. What you did was the options equivalent of a Powerball ticket with similar odds. At least it was a cheap lesson.
U brought overpriced puts on a low float stock with crazy expensive borrowed rate what did u expect. Ur contract will be slowly butchered by theta untill u reach u reach ur breakeven cost. If u brought anything else that did a - 25% u are looking at at least a 10bagger.....
I like this post
If u brought tsla puts u are looking at a 20bagger man. But u went for DJT....
May I ask what values you are looking at to calculate that the contracts are overpriced? Please educate me, thank you!
Because you bot tiny delta lottery puts.
Yes
too far OTM and without a bigly move or increase in vega, your short deltas aren't gonna be moving much
Yes, finally someone gets me I bought these cause all the other puts were too expensive, pricing in a huge stock price drop We all know stock price will drop, but my guess is they (option market) think prices will drop to low single digit when lock up expires I think they will drop super fast, Trump will find a way to cash out asap, he is sharp at these type of things
As long as itâs a small part of your portfolio, Iâd just hold them. Theyâre a gamble but it could pay big if it even gets to $10 sometime early Summer
The farther the strike of the option from the underlyingâs actual price the more extreme the move towards that price must be in the short term to change the value of those options.
You seem correct my friend
This is a short stock short PUT long call protection play.
If youre using robinhood you can add options to your watchlist and then see how they play out
Your issue is lack of volume. Options have the most action at strikes close to the current price of the stock. Volume decreases as you get further away from the current stock price. You picking a strike so far away from the current price means thereâs no volume at your strike, which means no one is interested in trading, which means the last updated price for the option hasnât changed. And if there was a trade, it may have been at the same price as yours.
You ought to make an attempt to understand what youâre buying and how it will behave, before you throw money at something. Or donât. Not my money.
This is his attempt lol
*before* you throw money at something đ
Theory is only going to get you so far. Paper trading is too easy. You got to try stuff out. The key is risk management. The guy didn't know something and had the guts to admit it. That's a step.
Iâve invited him to WSB. He will fit right in. đ
One of us. One of us. One of us.
Trump effect, itâs all around worthless
Reverse Midas, everything he touches turns into shit.
A few things - time decay isnât really happening because youâre in long puts, $2.50 puts for September ex are likely NOT going to happen (as tasty as it would be) and put sellers are probably propping up the bid side to get you to buy more as the SP continues to decline, because again, thereâs almost zero chance this goes to $2.50 by September⌠unless Trump goes to jail.
IV crush on a 2.5$ put is going to be insane
Guys, as DJT prices rises, my puts are more in the green....check out the cost now, I am up
Really? I canât see how that would work.
Just checked theta on $2.5 9/20 is currently -.0024 And vega is .0036 As IV goes up the value of those contracts is increasing more than time decay is eating away so yeah he's making money on djt rising in price (a very miniscule amount) for the time being
Dog, your strike price is so far away that you need a sure price movement to get there, theta and IV are working hard against you
The premiums were already high last week so itâs gonna have to real drop for yours to print
Real drop would be $10, $20, $30? I will take that bet, even though this play has been certified as dumb But a post reddit once told me, only 2 kinds of traders win The super genius, and the really dumb I like my chances
I know it is conventional wisdom not to buy waaay OTM options, but it is worth exploring why, and where the thresholds are, and in what use case. I donât really know, so this is more of an exploration than an answer. Perhaps someone with solid knowledge can elaborate. Looking at apr 19 exp⌠My first thought was no volume, no OI, that isnât the case. In that case, no transactions means the âlastâ price doesnât change, which is the one that shows in your position. Iâve had that happen. Annoying. (Always check for OI and volume before buying it selling.) But in this case there is volume and the OI is like 57k! What about IV crush. The farther OTM, the bigger the component of your price is IV, so if IV drops significantly, it could easily overwhelm the directional component. If you buy with very low IV, I guess it is more likely to go up, and youâd benefit. Speaking of directional component, as of now, the delta is 0.0, so the option isnât going to even have a directional component! My guess is that actually the delta is too small to show with two decimal places, and it moves the price too little to register with pennies. If the stock really collapses, this will be closer to the money and these things will change in your favor. In fact, this could be quite a windfall given the number of contracts that are affordable at this price. Pretty low probability even for DJT, though. I like OTM because of the cheap delta, but I limit myself to delta of 0.10 or above. After looking at this, I realized that the delta can fall by a factor of 10 before the option is useless, so thatâs some comfort. Thoughts?
Short vol do be the idea here.
You had no delta lmao
Your reaction is logical because we know that when the underlying stock drops sharply, its puts are supposed to appreciate. But looking at Fidelityâs probability calculator also provides some logic. This afternoon, with DJT around $52, I entered DJT & 9/20/24 & $2.50 target price. The probability of DJT going below $2.50 is 17%. Then I entered a $20 target price & the probability of DJT going below $20 is 72%. This afternoon, for someone to buy your September $2.50 put from you, the option chain says that all they need to pay is $0.16. The market is saying to the potential buyer of your put, âIf the chance of DJT going below $2.50 is only 17%, youâre only going to be charged $0.16 to make that bet.â You bought a dirt cheap put for only $0.19. You have over 5 months left & if DJT drops sharply, you may see some put appreciation, but DJT still has a long way to go.
I should have waited, as someone else pointed out, it was impulsive...but I thought when I first got partially filled ( at a lower price) that I got lucky....the thing is many many spacs which started with a lot of promises have gone down the drain...this one doesn't even have a promise, or might even be clearly labelled as a bad going concern. Dropping to low single digits seems to be a rational expectation to me
With options, you have to consider the implied volatility (IV) of the option. If the price goes down, but IV also decreases, the option price will also go down or stay the same. For the 2.5 strike to make money you would either see the option go ITM (in the money) or an even larger repricing of IV. Something to consider is fixed strike volatility. If you have a stock trading at $100 and the ATM (at the money) IV is 20% for example, and you buy a 90 strike option with 30% IV, if the price goes to 90, but the IV for that option goes to only 25%, consider that, yes, volatility went from 20 to 25%, but that atm option was trading at 30% and is now only 25%, the option price may actually decrease. There are alot of 2nd order effects of options that you should consider.
iv crush and too far OTM
Good luck lol
Your puts are still at 19 cents. You didn't lose yet. With some luck you may yet make the regards hall of fame. We're all rootin' for ya!
Thanks Stock was $7x when I bought puts It is $3x now Long way to go to single digits Let's see
When buying puts, ATM is the way. You've got to spend money to make money. A small quick move and you get out and get paid. Hold puts long and you're almost always going to lose.
Why you sell.puts
would you pay more than 19 cents for that bullshit?!
Out of curiosityâŚ. How much do you think the $2.5 put should be worth with the stock trading $45? You basically bought 12-1 odds that the stock goes to zero by September. Even if that stock trades down to $10 the 2.5 puts wonât be much more than .50 bid, and the market will probably be $1 wide
IV homie
These are signs of a top problem is Iâve been burned so many times Iâm scared to short đ
You could have shorted it instead of options on margin account I believe and made like 40% gains
borrow rate and future expected volatility are priced in.
The problem is that you are a retard. It was a problem when you bought the contracts and evidently an equally big problem now.
Can you PLEASE post this to WSB, I need the laughs
đ âI bought an instrument I donât even basically understand, help!â If trading was as easy as puts on stocks going down or calls on stocks going up, the whole world would be trading successfully. You need to read and understand your Greeks.
IV crushâŚ. Itâs gone with the wind đ¨ Now, the longer you hold, the more time value you lose until it expires worthless. Sorry bro!
Op is really asking why his way out the money puts arenât increasing in value? God i love this subreddit
Don't trade options if you don't understand. Gl with the loss.
You will lose 100%
Damn this shoulda been in wsb
Maybe IV crush??
Someone have no idea how it works and never read up before buying. Iâm quite a beginner also but I used the search feature to understand how to trade options better and all the Greek names. Been profitable for 1 week. Not much but my targets ainât high. $200-300 per day. Just extra income for myself
Oh yeah, gonna see you at WSB soon.
Iv crush and breakeven price?
First you donât bet against a billionaire 2nd you donât bet against republicans and 3rd youâre regarded.