Originally Posted by Daly
By far the biggest lesson I learned the hard way during 30 years of stock and option trading.
By far the biggest lesson I learned the hard way during 30 years of stock and option trading.
What about the boss man likes a mean decaffeinated espresso and open up that second button?
By far the biggest lesson I learned the hard way during 30 years of stock and option trading.
It's true, scientific studies claim there are more psychopaths percentage wise in the
stock market than any other trade. It does you well to have no thought for your customer.
Last edited by limitles; 01-31-2020 at 05:28 PM.
What about the boss man likes a mean decaffeinated espresso and open up that second button?
It's true, scientific studies claim there are more psychopaths percentage wise in the
stock market than any other trade. It does you well to have no thought for your customer.
You are pathetic. Even your insults suck. Just like your life. What's worse, you actually came back and edited that babble.
Just go ahead and get it over with.
i need help and im swallowing my pride and asking for it.
i had an edible earlier to unwind and shortly thereafter stumbled across this:
https://www.cnbc.com/2020/01/29/one-...cking-800.html
some mope bought 900 june call options on tsla at .... $800 strike.
please explain to me why on earth anyone does this, what outcome is he expecting here... assuming that price per share was correct at the time he's spending almost $3m and if the stock trades at anything less than $800 by expiration, he loses *his whole 2.7m*.
please connect the dots for me because im tired and high and i dont understand.
"Birds born in a cage think flying is an illness." - Alejandro Jodorowsky
"America is not so much a nightmare as a non-dream. The American non-dream is precisely a move to wipe the dream out of existence. The dream is a spontaneous happening and therefore dangerous to a control system set up by the non-dreamers." -- William S. Burroughs
he's got some underlying position he's trading around...
literally zero shot anybody with a brain is laying out $2M in naked premium like this...
real talk was it a drunk mouse click? what possible position could be helped there?
same premium against a $640 strike price:
$800 in june = +$2m.
"Birds born in a cage think flying is an illness." - Alejandro Jodorowsky
"America is not so much a nightmare as a non-dream. The American non-dream is precisely a move to wipe the dream out of existence. The dream is a spontaneous happening and therefore dangerous to a control system set up by the non-dreamers." -- William S. Burroughs
remember the option lesson...each option has a corresponding length (shortness) to it (the delta)...
could have a short stock position that he wants to flatten out a little or protect against an absurd move upwards...
could have a long PUT position that he wants to flatten out...
could think volatility is cheap at that strike (kinda doubtful)…
there's a litany of stock positions or options positions that this person probably has that he's looking to hedge against...
I will say that it seems odd that he's going that far out-of-the-money in that short of a time frame, but again I highly doubt this is just a naked gambbbbbbol...you don't have $2M to make this kinda bet if it's just a naked gamble...
absolutely fascinating. i cant imagine you ever being bored enough to do this but id love to see examples / graphs where that makes sense, im having trouble imagining where its advantageous compared to the 2nd example i posted. and i 100% believe/know youre right, im just not seeing the angle.
"Birds born in a cage think flying is an illness." - Alejandro Jodorowsky
"America is not so much a nightmare as a non-dream. The American non-dream is precisely a move to wipe the dream out of existence. The dream is a spontaneous happening and therefore dangerous to a control system set up by the non-dreamers." -- William S. Burroughs
ill be real with you 'tine, I have zero fucking clue...ive never had a trade structured where I was buying deep out-of-the-money options as part of a bigger position...selling yeah, selling covered calls and shit like that or selling way out of whack calls that are deep out-of-the money, but nothing like this...
one of the reasons you buy out-of-the-money calls is to buy gamma...so as the stock rises and your calls start to get closer to the money, you start to get longer and your gamma accelerates, which makes you get even longer...with something this far out of the money, gamma is non-existent and will be non-existent for a few hundred dollars...
This kinda reminds me of craps. The longer you "play" the more money you are eventually laying out.
Exactly. Gamma hedging.
absolutely fascinating. i cant imagine you ever being bored enough to do this but id love to see examples / graphs where that makes sense, im having trouble imagining where its advantageous compared to the 2nd example i posted. and i 100% believe/know youre right, im just not seeing the angle.
It's about the underlying volatility. You are scalping the acquired probability of the option finishing in the money. It gives you the ability to buy low and sell high without having directional risk. The downside is no movement or movement in only one direction. If it moves around a lot, you will have huge scalps and they easily will pay for the option premium.
you mean scalping by trading around the underlying stock, correct? I just don't get why the guy would go all the way out to the $900s instead of picking something a bit closer to the money...obv it has to do with premium outlay, but just don't get buying all that premium with non-existent gamma...
It's about the underlying volatility. You are scalping the acquired probability of the option finishing in the money. It gives you the ability to buy low and sell high without having directional risk. The downside is no movement or movement in only one direction. If it moves around a lot, you will have huge scalps and they easily will pay for the option premium.
like I said I never got to the point where I was trading the underlying against an options position...the dumbass I worked for did that a lot...
I get the theory behind delta-gamma hedging a position, but just wouldn't know how to execute it...
fuck id love to see some sort of graph demonstrating this concept. im sure ill bump into one eventually but until i see it expressed like that im probably not going to really 100% grasp the theory.
"Birds born in a cage think flying is an illness." - Alejandro Jodorowsky
"America is not so much a nightmare as a non-dream. The American non-dream is precisely a move to wipe the dream out of existence. The dream is a spontaneous happening and therefore dangerous to a control system set up by the non-dreamers." -- William S. Burroughs
He very well could have a huge short position and made a puke point. Almost nobody naked buys or sells options besides small retail investors. It's almost entirely as a hedge or a prediction based mispriced option volatility in which they will scalp gamma either long or short.you mean scalping by trading around the underlying stock, correct? I just don't get why the guy would go all the way out to the $900s instead of picking something a bit closer to the money...obv it has to do with premium outlay, but just don't get buying all that premium with non-existent gamma...
like I said I never got to the point where I was trading the underlying against an options position...the dumbass I worked for did that a lot...
I get the theory behind delta-gamma hedging a position, but just wouldn't know how to execute it...
The Natenberg book is the Bible for the traders in Chicago(all options or futures go through Chicago). The strategies are now much more complicated and derivative, but it is the basics.
I was gonna say that initially but didn't think it was correct given how far OOM those are...glad I was possibly sniffing up the right tree on that one...He very well could have a huge short position and made a puke point. Almost nobody naked buys or sells options besides small retail investors. It's almost entirely as a hedge or a prediction based mispriced option volatility in which they will scalp gamma either long or short.
ok i just read this:
"if a trader buys a call because he/she thinks premium is cheap, he/she would then hedge off some of the directional risk by selling stock short against the calls."
and lo and behold the premium on that june 900 option was $20, and now its $34 or something.
so there's a piece of the puzzle falling into place.
"Birds born in a cage think flying is an illness." - Alejandro Jodorowsky
"America is not so much a nightmare as a non-dream. The American non-dream is precisely a move to wipe the dream out of existence. The dream is a spontaneous happening and therefore dangerous to a control system set up by the non-dreamers." -- William S. Burroughs
The Natenberg book is the Bible for the traders in Chicago(all options or futures go through Chicago). The strategies are now much more complicated and derivative, but it is the basics.
"Birds born in a cage think flying is an illness." - Alejandro Jodorowsky
"America is not so much a nightmare as a non-dream. The American non-dream is precisely a move to wipe the dream out of existence. The dream is a spontaneous happening and therefore dangerous to a control system set up by the non-dreamers." -- William S. Burroughs
LOL...I think I read that fucker a dozen times trying to pound the concepts into my head...The Natenberg book is the Bible for the traders in Chicago(all options or futures go through Chicago). The strategies are now much more complicated and derivative, but it is the basics.
memories...
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