Board 8 > Stock Topic 26

(+) Yeah! (+)

Learning how to options trade...

RIP NASDAQ

Perfect time to sell puts, in my opinion. This way you dont own any stocks during these trying times...

I'd rather own stocks and invest in America. Much more upside!

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I'm considering putting in another 4k into my account and buying up some of these NASDAQ stocks while they're cheap and setting up 5-7% stop losses in case they drop too much more. Looking at my portfolio, my losers that wiped out my gains in other stocks were the ones I didn't put such a stop loss in so they fell 15-25%.

I don't understand options and don't want to play with something I don't understand yet. "Buy low, sell high, get dividends if you own it long enough" is something my small stock market brain can understand though.

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Wow. Another red day. Seriously concerned.

Bitcoin to 40k let's go

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You guys should buy some of my packs in my booster box opening. 15 per, might get shinies...!

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GameStop spreads keeping me off life support...

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I really want to sell everything snd start fresh with options. But losing $30k seems reckless.

Okay moonroof time to listen to Chris. Buy 50,000 shares of dnn. Then sell 250 calls for long for 1.50 1/20/23. You will get about 12,500 dollars back immediately. Use that money to buy Disney. Then relax. Congrats, you will make a lot of money.


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Note: this is very lazy but also very little downside tbh

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downside is if he is in a platform with option trading fees that would be killer. That trade would cost me 65 cents a contract.

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I mean are we really worrying about a 160 dollar fee on a 12,500 contract? I don't think that is killer

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So I understand, doing that will tie up approximately $50k for 1.75 years, at which point I can then sell for a profit (if the stock is above whatever it is currently at).

And Disney has to go up since Id be buying more of that stock, too. But Id be able to sell that whenever. Id have $75k into Disney at that point since I already have $25k.

Mine is $1 per contract.

Well think of it like this. If it goes to less than 1.50 you just made a free 12.5k. On top of that you have 25k shares not under contract so that's another 12.5k you have earned if it does go to 12.5k Also disney is eternal but you can go with any super blue chip tbh

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Sunroof posted...

Mine is $1 per contract.

So 250. Really not fun but also chump change for you let's be real.

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The variable is whether DNN plummets by 1/2023. Id own $50k at ~$1. If it goes down to even .75, Id net loss.

Yeah but you still have protection from a lot of downside. Nothing is for certain but I see no reason for dnn to fall off the face of the earth in the next two years. Do a smaller amount if it makes you feel better. It's a winning play though
I mean they are willing to pay you 50% of the stock's value. That's insane imo

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DoomTheGyarados posted...

So 250. Really not fun but also chump change for you let's be real.

But enough where I think the rake isnt worth it. Options are already not necessarily better investments then just owning the stock. I think this makes it a bad deal

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masterplum posted...

But enough where I think the rake isnt worth it. Options are already not necessarily better investments then just owning the stock. I think this makes it a bad deal

I mean ... sure lol

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DNN will likely dilute more because they have to raise 300 million more. Im eyeing the exit.

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Thank god I crushed it with AMC. Ill still be up YTD even after I take these massive hits. Waiting until Monday though.

GME! Great to see +37% today.

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Thank god were recovering.

Nice GME play, red sox

Hot damn, I'm liking this resurrection.

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mmm,

boo

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Still down terrible amounts from yesterdays bloodbath.

Green for the day, still down a lot from yesterday's bloodbath as well.

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Glad I sold my puts yesterday!

Also I really like Chris's idea.

E: Never mind Chris wants to sell calls and profit the premium immediately. Better idea than what I misread it as! I'm hungover lol. I doubt you'd have to wait more than a few months for the stock to hit 1.50 again. Unless, well, they do dilute like crazy. I haven't kept up with it so neon may be right there.

If DNN has a red day soon where it goes under 1, I'll probably buy long term calls though. Like I said, I regret not buying leaps when I bought more shares at .89.

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So the good news is that the last time this happened was 3/5. The market actually was lower than it is now, granted it happened way more rapidly. And it recovered within two weeks.

So if thats an indication of anything, hold!

I don't think they plan on rushing diluting unless they have to. The management seems more competent than that-- running the spot Uranium play implies to me that they want to secure some market value first

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So what are your all's opinions on whether it's a good time to buy a house in say, the next 3 months? I'm in Tennessee and housing prices don't seem to be quite as ludicrous as many places across the country. I'm going to have to do a shitton of research on the housing market soon but any thoughts or advice is useful!

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All I keep hearing about is how the housing market is booming. I also think interest rates are going up compared to when covid first started.

Yeah, mortgage interest rates are going up which brings overall housing prices down - very good for someone like me who wants to put a substantial sum down all at once.

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GME at $183 - we're higher than before the earnings release now.

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I am by no means a real estate expert, but as a prospective homeowner, I've tried to keep my ear to the ground - especially regarding what my fellow Millennials are up to.

From my experiences and reading, Millennials are not just city-oriented but are inclined toward a surprisingly narrow lineup of US cities (specifically those with vibrant cultural/nightlife scenes and low median ages - no Boomers for them, kthx). While the mid-2000s/early 2010s crowd was all about the Pacific Northwest and California, this "cohort" of homebuyers is riding HARD for the South and Colorado. This has resulted in a handful of cities getting absolutely bum-rushed by young professionals. Charlotte, Nashville and Denver are some of the biggest examples, and Tampa seems to be emerging as the city du jour.

At the blistering rate these Millennial Mecca cities are exploding, though, I think we're reaching that breaking point where homebuyers have to accept that they're priced out of the in crowd and must set their sights on less "cool" targets. That's exactly what I would bank on, personally. I think the folks who wait until the market cools off a little in the fall/winter and buy a home in a less-hyped but promising city like Huntsville, Kansas City, Knoxville or El Paso will be glad they did.

This is what I'd plan on if I could convince my girlfriend. >_> She's very much in the "hip city or bust" mindset and is especially keen on Denver and Charlotte. But we're not from old money or STEM money, and my SUN dividends can only go so far...!



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Very well-written insight.

Ah Ryan Cohen tweeted about an hour ago.

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Who is he and what did he say...

Ryan Cohen is I think the single largest shareholder of GME. He's the one who kicked off this crazy run by buying 13% of the company and getting himself placed on the board. Effectively he's running GME now.

He tweeted what looks like a gif of a teddy bear coughing. This is um, the least cryptic one of his tweets I think. Think it means bears are in trouble.

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Lmao. Thats funny.

OPTIONS TRADING

DEFINITIONS

- Strike Price: Price you think the stock wont go above or below (depending on buying or selling) by the Expiry Date
- Expiry Date: Date you think the Strike Price wont hit by
o These are only on Fridays. Depending on the size of the stock, it can be every Friday, one Friday a month, etc.
o Always set these only 1-2 weeks out (this ensures you wont be tied to the stock for too long and also minimizes speculation)
- Contract: 100 shares of a stock. Therefore, you must own at least 100 shares and can only go by 100s (if you have 230 shares, you can only do two contracts)
- Limit Price: The amount of money you make per share (e.g., 2 contracts at limit price $1.10 equals $220 premium). Must be between Ask and Bid prices. Always make this slightly above the Ask price (this ensures the order executes)

SELLING

Covered Calls
- Option Type: Call
- Transaction Type: Sell to open
- Strike Price: Price you think the stock wont go above by the Expiry Date
- Tip: Always make the Strike Price higher than your entry price (this ensures you wont sell the stock for a loss)
- Once you do this, you immediately earn a Premium which is calculated based on the Expiration Date, Strike Price, Limit Price, and number of contracts. This is yours no matter what happens
- Goal: Stock price goes up but doesnt surpass the Strike Price on the Expiry Date
o If the stock does surpass the Strike Price, then you are forced to sell the stock at the Strike Price (for a profit, if you made it above your entry price) regardless of how much higher it finished on the Expiry Date at close
- NOTE: You must already own the stock that you are selling a covered call on
- NOTE: It does not matter whether the Strike Price is surpassed prior to the Expiry Date. All that matters is whether it surpasses it on the Expiry Date at close.

Puts
- Option Type: Put
- Transaction Type: Sell to open
- Strike Price: Price you think the stock wont go below by the Expiry Date
- Tip: Always make the Strike Price lower than the current price (this ensures the Put doesnt auto-execute for a loss)
- Once you do this, you immediately earn a Premium which is calculated based on the Expiration Date, Strike Price, Limit Price, and number of contracts. This is yours no matter what happens
- Goal: Stock price remains above the Strike Price on the Expiry Date
o If the stock price falls below the Strike Price, you are forced to buy the stock at the Strike Price regardless of how low it closed (e.g., buy a stock at $1.50 even though it closed at $1.40).

BUYING

Covered Calls
- Option Type: Call
- Transaction Type: Buy to open
- Strike Price: Price you think the stock will go above by the Expiry Date
- Tip: Pick a Strike Price above the current price
- Once you do this, you immediately pay a Commission which is calculated based on the Expiration Date, Strike Price, Limit Price, and number of contracts
- Goal: Stock price surpasses the Strike Price. The larger the difference between the Strike Price and stock price on the Expiry Date, the more Premium you earn
o If the stock does not surpass the Strike Price, then you get no Premium

Puts
- Option Type: Put
- Transaction Type: Buy to open
- Strike Price: Price you think the stock will go below by the Expiry Date
- Tip: Pick a Strike Price below the current price
- Once you do this, you immediately pay a Commission which is calculated based on the Expiration Date, Strike Price, Limit Price, and number of contracts
- Goal: Stock price goes below the Strike Price. The larger the difference between the Strike Price and stock price on the Expiry Date, the more Premium you earn
o If the stock does not go below the Strike Price, then you get no Premium

Theres a worksheet I made for myself. It can be helpful to others who have no idea about trading options.

Zachnorn posted...

I'm considering putting in another 4k into my account and buying up some of these NASDAQ stocks while they're cheap and setting up 5-7% stop losses in case they drop too much more. Looking at my portfolio, my losers that wiped out my gains in other stocks were the ones I didn't put such a stop loss in so they fell 15-25%.

I don't understand options and don't want to play with something I don't understand yet. "Buy low, sell high, get dividends if you own it long enough" is something my small stock market brain can understand though.

Going back to this, I would suggest not setting stop losses, basically ever. If you think a stock is a good investment at a certain price, why would it be a good sell at a price 7% lower? Unless you think something has changed about the company or the market, the price going down is a reason to buy, not sell.

If you're not comfortable having a lot of money at risk without a stop loss to limit losses, that's a sign maybe the initial purchase price was too high, or you haven't diversified enough. With a stop loss, you will likely lose the amount of the stop loss on most trades, and 5-7% itself is not that big, but repeat a few times and it can become quite big. You can lose money even while the stocks you are investing in are flat or even going up, because you are missing out on the gains while eating the losses.

Stocks falling 15-25% is normal. Warren Buffett has said (paraphrasing) that if you aren't emotionally able to handle a 50% drop in your stocks, investing probably isn't for you.

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red sox 777 posted...

Going back to this, I would suggest not setting stop losses, basically ever. If you think a stock is a good investment at a certain price, why would it be a good sell at a price 7% lower? Unless you think something has changed about the company or the market, the price going down is a reason to buy, not sell.

If you're not comfortable having a lot of money at risk without a stop loss to limit losses, that's a sign maybe the initial purchase price was too high, or you haven't diversified enough. With a stop loss, you will likely lose the amount of the stop loss on most trades, and 5-7% itself is not that big, but repeat a few times and it can become quite big. You can lose money even while the stocks you are investing in are flat or even going up, because you are missing out on the gains while eating the losses.

Stocks falling 15-25% is normal. Warren Buffett has said (paraphrasing) that if you aren't emotionally able to handle a 50% drop in your stocks, investing probably isn't for you.

Good thing for me my very first market exposure was like a 80% loss lmfao

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ExThaNemesis posted...

Good thing for me my very first market exposure was like a 80% loss lmfao

Probably a net positive in the long run. Better to learn the FOMO lesson with thousands rather than hundreds of thousands.

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Looks like ARKX is launching on Monday. Good, my space stocks could use a boost!

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red sox 777 posted...

Going back to this, I would suggest not setting stop losses, basically ever. If you think a stock is a good investment at a certain price, why would it be a good sell at a price 7% lower? Unless you think something has changed about the company or the market, the price going down is a reason to buy, not sell.

I have two types of stocks in my portfolio: Serious investments (80%), and gambles/memes (20%). My serious investments like QQQ, QQQJ, DIA, DIS, ACI, etc., don't have 7% stop losses. The only one that has reached that level before was QQQ, which I kept and averaged down and plan to hold.

The problem is that I gamble and haven't used stop losses. In trying to make about $30 in BYND and not being willing to take a loss, my expected loss (if I were to lose on my bet) of maybe $30 within a month turned into $300 because I kept averaging down. I think I could have faced a $50-80 loss if I did a 7% stop loss.

That said, I did use a stop loss today in a gamble/meme stock, and I learned this lesson:

red sox 777 posted...

With a stop loss, you will likely lose the amount of the stop loss on most trades, and 5-7% itself is not that big, but repeat a few times and it can become quite big. You can lose money even while the stocks you are investing in are flat or even going up, because you are missing out on the gains while eating the losses.

I set up a conditional trailing stop limit order such that if GME goes above $150, an order gets sent for a trailing stop of -2% and a limit of $150. I was expecting it to go further than it did, hopefully up to the $161 that I paid, but that didn't happen - it just saved me from larger losses had I given up earlier in the morning. It sold for $150. I could have gotten $185 later on and made money instead of losing $11. That's an $11 lesson, I guess, and I'm going to remove a similar order for closing BYND.

red sox 777 posted...

Stocks falling 15-25% is normal. Warren Buffett has said (paraphrasing) that if you aren't emotionally able to handle a 50% drop in your stocks, investing probably isn't for you.

I'm not sure if I have the opposite problem in that I'm a gambler and found a way to gamble without driving to a casino and have way better odds at the same time.

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Well, if the odds are against you, the best move is not to play at all. If the odds are in your favor, then you generally want to play more. In general, you can have plenty of fun in the market exclusively buying stocks where you think the odds are in your favor, so I don't see the need to ever use the model you would for playing a negative expectation game at a casino.

At a casino, the odds are against you so you want to end the game quickly so you can stop exposing your money to the house edge. Intuitively, you are thinking, if I continue playing forever I am going to lose all my money. And that's accurate. So you want to stop both gains and losses quickly. But if the odds are in your favor, that calls for a different approach.

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