Just learned about options and came up with this idea.
What if you buy a put option of a really volatile stock that is dumping and at the same time go long on this stock?
It either dumps and you make money with the option (and you close the long trade, when the dump momentum is confirmed) or it bounces up and keep your long trade. The worst case scenario is that the gains of the long trade in case of a bounce all less than the premium you paid for the options.
What could go wrong?
Only serious answers from experienced traders. Don't make me go to r/wsb
Zoom on the left torso area, notice the bump and the shitty photoshop job. Imagine how fat she is.
Blake Morris
its not really a "strategy" but more of a hedge of your long position, it's like buying insurance on your long position in case it shits the bed
rather just buy a call and a put (straddle) if you know heavy volatility is coming
Brandon Thompson
>dreams ruined
so natural ass/torso ratios like this are a pipedream :(
Angel Reyes
the moment you think the dump momentum is "confirmed" and close your long it starts pumping
Jordan Perez
this is called 'gamma scalping' when you're long premium position, you're positive gamma and as long as you keep your delta and vega in check, it is an inherently profitable strategy because the position will increase by gamma. You can understand this relationship better if you visualize the differentiatial equation of an American call option
Isaiah Allen
why not do this on volatile penny stocks? the premium will probably be cheap too... Would it be cheap? for $1 stocks?
alright I found it: dC = dS * delta + 0.5 (dS2 ) * gamma + d Sigma * vega - theta
in plain English this means: the change in option value is delta x stock price change + 1/2 gamma x stock price change squared + IV change x vega less theta. Once you have hedged the delta (by going long on the stock against your put), and assuming IV remains flat, then you are simply paying theta every day and, in return, collecting gamma (I.e. stock price change ^ 2 is always positive).
Joshua Sanders
you are a newfag arent you? if the underlying is volatile the implied volatility (IV) gets included into the option premium and i bet that the spread on pennystock options is really wide too just read the wikipedia /investopedia sections about options or a book
Noah Wright
wow. Zig Forums is clever after all.
Im a beginner trader and just learned about options.
In plain english: Do you think that using this "strategy" on volatile, diluted, bleeding, bagholding, $1~$5 stocks is profitable?
I am a total newfag in options. Just watched a tutorial. Didnt say anything about IV in the first hour of the total 2,5h. DAMN THAT JEWS. THEY THOUGHT UP OF EVERYTHING!
How much will the said volatility impact the premium price?
And just say that the stock isnt super-volatile, but it has a downward/bleeding pattern. How would that affect the premium price?
Also just watched a video on implied volatility and it seems getting the option strike price really close to the current price will keep the option cost very low.
IS THIS TRUE? DID WE FIND THE WAY TO BEAT THE JEWS IN THEIR GAME? DONT LET THE INTERWEB KNOW ABOUT IT.
yeah its true, the more ITM the option is, the less IV is considered but for ITM options u need more capital, because they are more expensive and if price goes against you, you lose more because you dont only lose the hope like in OTM options but also real value because the ITM option had real value behind it if you would exercise it in any given moment
David Edwards
im talking $1~$5 NASDAQ stocks they're volatile enough
Im talking about getting an option as close to the current price as possible. On very cheap ($1~$5) stocks. The premium wouldnt cost more than $800. Right?
I THINK WE ARE UP TO SOMETHING Zig Forums. DONT LET INTERWEBZ KNOW.
>im talking $1~$5 NASDAQ stocks >they're volatile enough Not necessarily, TSLA was more volatile than some of those stocks. But obviously the IV was too
James Stewart
i dont know how much it would cost, you didnt specify experation date retard weeklies, monthlies? 2-3months?
>DONT LET INTERWEBZ KNOW stop this s*y shit u cringe sissy only degenarates and high iq people trade options because most people dont get calculus
Logan Price
if you want to /make it/ with options go to /r/wsb faggot if you buy options its like playing the lottery if you sell options its a steady stream of income until you get burned and blow up your account
Josiah Butler
It's alright but you need a really good way of finding: 1) highly liquid 2) low IV stocks. Plus the constant rehedge could generate high trading fees.
Tyler Stewart
Well the whole idea behind this strategy is to give as less money at the premium as possible so you make profit by the gains in case it bounces back.
Buying a $50k~$100k put for TSLA premium would beat the whole purpose of the strategy. (and i dont have this kind of money anyway lol. I need to beat the jews first, remember?) The whole point is keeping the premium price low.. and make consecutive profits off these kind of trades.
im talking buying put Options (and hedging at the same time)
You get to short sell with limited risk (only the premium instead of the unlimited risk of short selling). AND you bypass all the borrowing fees. You know that these bleeding low cap stocks are hard to borrow for shortsell.
PLEASE, PLEASE. DONT LINK THIS THREAD OUTSIDE. IM AFRAID THAT THE JEWS WILL MAKE ADJUSTMENTS TO THEIR BROKERS AGAINST THIS PLAN
Stop, stop avatarfagging with disgusting roasties, pick up a book or at least a youtube tutorial. This isn't a game. Someone is going to take your money and enjoy dinner with it
" Someone is going to take your money and enjoy dinner with it"
Too vague. Tell me what could go wrong. I only risk the amount equal to [option put premium , closed to current price of a low priced stock (-) long profit]
