EPTTrading/Investing Thread - Page 78
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farvacola
United States18863 Posts
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Emnjay808
United States10665 Posts
 I’m a simple man: stock goes up I sell. Stock goes down I buy. | ||
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{CC}StealthBlue
United States41117 Posts
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farvacola
United States18863 Posts
Huge gains on a small number of options just depends on the value of the bets being bought and sold, someone who plays the game right and has significant wealth to stake can make outlandish bets and win big. | ||
micronesia
United States24777 Posts
On September 03 2021 09:17 {CC}StealthBlue wrote: On options I know people aren't buying the stock. So how are people posting massive gains just by buying a few options on said stock? Typically one options contract applies to 100 shares rather than just 1 share of the underlying stock. Also, many types of options contracts allow for extremely high rates of return. If a stock is at $20/share and I buy a contract which is useless unless the stock price raises to $30 by the end of next month, the contract was probably very cheap unless everyone is expecting the price to jump in the near future. If the price goes up a little above $30/share by the end of next month, I recover my investment. If the price goes up to $40/share, my rate of return is huge. On a per share basis, I invested something like 0.25, so I double my money if the share price goes up to $30.50. I quadruple my money if the share price goes up to $31, etc. That's a simple version of the concept. | ||
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KwarK
United States44058 Posts
The problem with that bet is that Liverpool FC is pretty expensive and the valuation isn't that volatile. Lets say they do win and you flip it for 5% more, that's just 5%, not super sexy. Also you need to be a billionaire. What would make more sense is to simply bet that they win at a bookies. If they win then you can get much higher returns but if they lose then you lose your entire wager, you don't own anything beyond the right to claim a prize if they win. Owning a stock is buying Liverpool FC. Owning an option is placing a bet on Liverpool. The mechanics on how they let you bet on it aren't super relevant, the point is that it's essentially no different than betting. The key difference between investing in options and investing in stocks is the same as the difference between betting on a soccer team and buying one. | ||
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RenSC2
United States1091 Posts
A Call option is the right to buy the stock at a set price (the strike price) in the future. Each contract has an expiration date, a strike price, and a cost to buy. Each options contract is normally for 100 shares of a stock. So you could buy a call option for ATVI (Blizzard) that expires in 15 days with a strike price of $85 for about $0.50 per share, multiplied by 100 shares... 100 x $0.50 = $50. If ATVI is above $85 on Sep-17th, then you'd exercise your option and get 100 shares... and probably sell it all immediately at market price. So, we'll say it hits $86, you'd exercise your option, buy 100 shares at $85 (your option) and immediately sell them at $86 (market price). That's $100 profit, but subtract the initial $50 investment. You still double your money in 15 days just by a stock going from $81.31 to $86. Putting $50 directly into the stock in that time would only give you a fractional share (0.615 shares) and a total profit of about $2.88 in that time frame. So you can see that buying Call options allows you to control a large amount of shares for very little investment and when things work out for you, it can be extremely profitable. The downside is the risk. If ATVI doesn't hit $85 by Sep-17, you lose 100% of your initial investment of $50. If instead, you bought the stock outright, you'd still have the 0.615 shares of ATVI. Many options traders will not hold to expiry. They will sell the option back to the market. So if you bought the Sep-17 $85 ATVI option for $0.50/share and the price of ATVI goes up tomorrow, you could sell the option itself back to the market for a profit that will be significantly more than buying the underlying stock. However, again, I must caution that a part of the price of an option is Time. Each day, an option automatically loses value because it has less time until expiration. If the underlying stock stays the same price, the option will be worth less each day. It's very easy to have the market dip against you and then hold and continue to lose value in your Call option until it expires worthless and you lose everything. If you do decide to get into buying options, make sure you are budgeting appropriately and expect some/most (depending on how risky your purchases are) of your Call options will expire worthless. | ||
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Vivax
22372 Posts
On September 03 2021 09:17 {CC}StealthBlue wrote: On options I know people aren't buying the stock. So how are people posting massive gains just by buying a few options on said stock? By betting on a price change buying close to expiry (higher force required to move the short string over the long string) with high leverage (elasticity). If the stock jumps, the force required to move it there multiplied with the elasticity you bought is your gain, it'd be a shaded area or derivative of something I think so cba to draw a model in paint. It's a predation game between call sellers, banks and call buyers. In a way, with options you can steal (stocks) from the rich selling calls if it goes your way. All the volatility fueled by leverage used not 'released' at a quad opex will have to be unwound at some point later on when banks sell the stocks they had to buy cause their customers bought options. Unless they pack it into derivatives and sell it to a central bank. | ||
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{CC}StealthBlue
United States41117 Posts
Space infrastructure conglomerate Redwire began trading on the New York Stock Exchange on Friday, joining a flurry of space companies closing SPAC mergers and going public. “We’re really making an effort to get the message out above the broader SPAC noise that we are a revenue positive, cash flow positive, very financially conservative and rapidly growing company,” Redwire chairman and CEO Peter Cannito told CNBC. Redwire, formed last year by private equity firm AE Industrial Partners, merged with special purpose acquisition company Genesis Park, and now trades under the ticker “RDW.” Shares of Redwire surged as much as 20% in trading from its previous close of $10.50. Redwire is the sixth space company this year to close a SPAC deal and go public – following AST & Science, Astra, Spire Global, Momentus, and Rocket Lab. Several more space companies are expected to go public before the end of the year, with deals in progress by BlackSky, Satellogic, and Planet. Cannito emphasized that merging with a SPAC “was just a convenient mechanism for going public” for Redwire, coming with the benefit of adding as much as $170 million in cash from the deal. The merger valued Redwire at $675 million in equity. Redwire, which spent much of the past 12 months acquiring and integrating seven space companies into one, plans to use that cash to continue “creative M&A” as well as make “some internal investments” along the way, Cannito said. “We have a really exciting pipeline of opportunities that we’re looking at right now,” Cannito said. The company’s iROSA solar arrays were delivered by SpaceX to the International Space Station. Also, Redwire sent a new 3D-printer to space to demonstrate manufacturing with lunar surface material, won a Virgin Orbit contract to deliver digital engineering solutions, signed an agreement with Sierra Space for in-space services, and announced Firefly Aerospace as a lunar lander mission partner. Overall, Redwire is providing hardware and services for space infrastructure, which it estimates is currently a $15 billion market. Source | ||
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Vivax
22372 Posts
Otherwise I think that platinum is a buy here for safe players. | ||
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Emnjay808
United States10665 Posts
My NIO is looking good, though. I shouldn’t have touched SPCE in the first place and put it into NIO. Oh wells. | ||
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BrTarolg
United Kingdom3574 Posts
I'll give you a few things i know professionally that actually work 1. selling options with a wide spread. Market makers basically hose retail that buy options 2. buying calls. This works because retail (bad traders) sell covered calls without understanding wtf they are actually doing or what their exposure is, so you basically just take the opposite trade 3. once in a while, buying vol. This is more of a directional trade, but market makers aren't necessarily that smart, and tend to have recency bias in vol (esp in crypto), if vol has been low for a few months or something.. So if they start pricing IV at like 40-50 for btc, it's probably time to long some options In general though, anything else is just you getting hosed by the market maker. On a side note, i've been doing some recent accounting, and my YoY dollar returns is 1000%. Weee | ||
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Emnjay808
United States10665 Posts
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{CC}StealthBlue
United States41117 Posts
Source | ||
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Blitzkrieg0
United States13132 Posts
On September 04 2021 04:56 Emnjay808 wrote: Options seems like it’s just gambling and not investing? Gambling sure, but it's the difference between walking into a casino and playing Roulette or Poker. The casino has an edge in roulette. You're playing Poker against other people so you might have an edge or you might be the fish. Just a matter of game selection. | ||
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Emnjay808
United States10665 Posts
On September 04 2021 06:53 Blitzkrieg0 wrote: Gambling sure, but it's the difference between walking into a casino and playing Roulette or Poker. The casino has an edge in roulette. You're playing Poker against other people so you might have an edge or you might be the fish. Just a matter of game selection. Yeah supposedly the stock market is transparent and everyone has access to the same information, it’s just how bullish or bearish you feel about a stock. I had a chat with my boss (I work for Proctor and Gamble) after we had a big conference call and I brought up if it would be unethical to buy some shares. My boss then disclosed that he has up to 3.5M worth in options, he just hasn’t exercised them yet (he’s been with the company for 10+ years). I digress, but my point is that there is always some “inside” information that will give some retail investors an edge. | ||
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BrTarolg
United Kingdom3574 Posts
this idea that it's in any way fair is totally bs, game is extremely rigged lol For a start market makers have a huge advantage as they see the entire order flow and get to read the tape in a way that you can't, aswell as getting all sorts of privileged access Funds trading against you also have a huge informational advantage on you, inc all sorts of premium data like tickertags, card payments (imagine being able to see where everyone actually spends their money in real time lol), and probably paying robinhood to frontrun your orders lol Literally being able to see things that can materially impact the stock price through your purchases and conversations with data that you need to pay millions for, and then dump on the masses of retail traders that think they can watch the news and trade That being said, there are occasionally blind spots in the market (the guy who invented tickertags is a classic example of this) At least in crypto + defi the vast majority of data is onchain (everything is public and recorded forever) and it's a WAY more even playing field. Also just in general tradfi is so shit at this space because they are slow to adapt, half of them still think it's a scam lol | ||
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{CC}StealthBlue
United States41117 Posts
Bonds issued by heavily indebted developer China Evergrande Group plunged on Monday on growing investor worries over the company’s ability to pay its debts, prompting China’s stock exchanges to halt trading. The Shanghai Stock Exchange said in a statement that it had temporarily suspended trading in China Evergrande Group’s 6.98% July 2022 corporate bond following “abnormal fluctuations.” The exchange had also suspended trading in the bond on Friday. Source | ||
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{CC}StealthBlue
United States41117 Posts
https://www.fitchratings.com/research/corporate-finance/fitch-downgrades-evergrande-subsidiaries-hengda-tianji-to-cc-07-09-2021 The downgrade reflects our view that a default of some kind appears probable. We believe credit risk is high given tight liquidity, declining contracted sales, pressure to address delayed payments to suppliers and contractors, and limited progress on asset disposals. | ||
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Emnjay808
United States10665 Posts
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