Board 8 > Stock Topic 25

(+) Yeah! (+)

Sunroof posted...

That sounds different from what I learned about doing. Confused.

Just to clarify What i was telling you about was selling puts which is an income strategy. Fixed max profit but relatively safe.

What Chris is doing is buying puts which is a speculation strategy. A lot more potential profit but more risk

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Ohhhh okay. Thanks.

Yes, he bought puts rather than sold them.

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So buying puts is when you are saying the stock will go down and if it does then you gain? And you never own the stock

It looks like the only good thing I did in the last month was to sell GME

:|

Everything else sucked
Went into PLTK, was +4% the day after, now I am at loss
Went into FVRR, was +8% the day after, now I am at loss

I didn't even open my app today. I don't want to know how much money I lost. I only looked at the stocks I am holding on Yahoo and wanted to cry

The thing that bothers me the most is how...this isn't the market being weak, this is just a few overinflated stocks (mostly)
Like, fucking Facebook is immune
So I am not feeling "oh well at least the whole market is in red" - I am actually feeling my stock picks sucked ass

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Yup. You can also buy them as insurance on a stock you do own.

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Nanis23 posted...

Like, fucking Facebook is immune

Facebook has been undervalued for a while in general so it won't go down as much.


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But really @Nanis23 my advice is to get out of anything that is super risky that you don't believe in and just let the rest ride. don't check it for a week.

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Colegreen_c12 posted...

But really @Nanis23 my advice is to get out of anything that is super risky that you don't believe in and just let the rest ride. don't check it for a week.

I have Apple

It's not going super hot either
Basically almost every stock that was good in the last year is now suffering

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It's suffering for a few days but there is 0 chance apple doesn't make you money in the long term.

Heck i'd be surprised if it didnt make you money in 6 months.

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Im looking over my portfolio. Im 100% content with holding Disney and EVRI. Slightly concerned with Penn and BAND. But peloton....has been very bad.

Days like today are tough. Finally seeing some signs of life in the market after hours.

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I'd put more into apple. It's holding at 120 easy. Shrug

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BTC ded

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So I understand what sell to open is for calls and puts. What is buy to open for calls and puts?

Buying the option for a debit (ie you pay money for it).

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If selling to open a put is essentially me picking a price below the current price of a stock and hoping it doesnt hit, what is buying to open a put? I need examples to help me understand.

It really is crazy how there are no clear examples of options trading online anywhere.

Sunroof posted...

If selling to open a put is essentially me picking a price below the current price of a stock and hoping it doesnt hit, what is buying to open a put? I need examples to help me understand.

just think about the opposite.

If you sell a put you are picking a price below the current price and hoping it doesn't go below it.
If you buy a put you are picking a price below the current price and hope it goes below it. (The more the better).

Basically buying a put benefits from a stock tanking. That's not the most common case for buying it from what I know though. Usually you buy it as a sort of downside protection for a stock you own. (Ie if Tesla is at 800 and i own 100 shares, I buy a put at 700 just in case it tanks so that I don't lose nearly as much money)

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So I can buy a put for peloton at $120 because I think there is no way that is happening by Friday?

Disregard. Has to be below the current price. Got it.

So for buying a call, that is when you pick a price above the current price and you want it to go above it?

Sunroof posted...

So I can buy a put for peloton at $120 because I think there is no way that is happening by Friday?

So a PTON PUT strike at 120 would cost you a good deal of money cause its 18 dollars in the money already. You would like be paying like 19-20 bucks for it. The only way it would pay off is if PTON goes down even further.

Honestly my advice is the stay away from buying options for now and get used to selling them first.

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Sunroof posted...

So for buying a call, that is when you pick a price above the current price and you want it to go above it?

Usually yea. You can also buy calls below the current price as well but you pay more premium for it.

I think there's a lot of concepts here at play and your trying to go through too many of them at once. I would just focus on selling covered puts and covered calls for now and learn those well and then you can try to understand the flip side.

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If you really do want to go further I recommend starting here: https://tastytrade.thinkific.com/courses/beginner-options-course

Just go through the options basics section multiple times until you really understand it.

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Got it. Thanks

Wait. What if it doesnt go below the strike price? Is there a scenario where I end up buying the stock like in selling the put option?

If I had to guess, Id imagine you buy the stock at the strike price IF it closes above said price on the expiry date?

And for buying calls, your strike price is the price you want the stock to be above, and if its below then your shares get sold at the strike price?

If you buy calls, you get the right to buy the stock. If you buy puts, you get the right to sell the stock. You can buy puts on a stock you own as insurance.

For instance, say I own PTON, I bought it at $100, and want to limit my downside on PTON without limiting the upside. I can buy a put at $100 strike for Jan 2022 for about $22. Then if the stock is trading below $100 in January 2022, I can exercise my put and sell the stock for $100. My maximum loss is $22, which is achieved with a share price at $100 or anywhere below. I break even at $122, and above that my profit is $22 less than it would have been if I didn't buy the put.

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Note that you can probably get a very similar range of outcomes with much less capital invested by buying calls, rather than buying shares + puts.

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So when you buy a put, you pay a premium up front? But you also receive a premium if the strike price is not hit at the end?

Sunroof posted...

So when you buy a put, you pay a premium up front? But you also receive a premium if the strike price is not hit at the end?

If you hold until expiration, you make money at the end only if the strike price is hit. The put makes money only if the strike price is hit.

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So in selling puts and calls, you dont want the strike price to hit. But in buying, you do.

Yup. Options is a zero sum game.

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Okay. And in buying both, you pay a premium upfront.

And also, the wider gap between the strike price and actual price, the larger gain.

Interesting how selling covered calls is the only one of the four where you have to already own the stock.

On average, selling covered calls is probably the only one of the four that is actually a good investment, for precisely that reason (you are actually investing in a company).

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• Do you pay a premium up front in buying both puts AND calls?
• Do you own the stock if the strike price does not hit in buying both puts AND calls?
• You only make money if the strike prices hit in buying both puts AND calls?
• Your goal is to have a wide gap between the strike and closing prices in buying both puts AND calls?

https://gamefaqs.gamespot.com/boards/8-gamefaqs-contests/79367303

Sunroof posted...

* Do you pay a premium up front in buying both puts AND calls?

Yes

* Do you own the stock if the strike price does not hit in buying both puts AND calls?

Depends. You could own or not own the stock independently of whether you own options. Buying options never obligates you to own the stock.

* You only make money if the strike prices hit in buying both puts AND calls?

If you are holding to expiration, yes. It's possible to profit by closing out of the money options during a short term spike in their price. For example, a GME $30 put probably saw its price increase a lot between when GME plunged from $100 to $50. If you kept holding it it would never have crossed the strike price but if you sold it when the stock had just plunged to $50 you probably made money.

* Your goal is to have a wide gap between the strike and closing prices in buying both puts AND calls?

Yes.

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Thanks!

Fuck Nio

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