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/biz/ - Business & Finance


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29620613 No.29620613 [Reply] [Original]

>buying 10,000 contracts worth of $125 puts in GME that expire in a year only costs $100

What am I missing here?

If my math is correct and Gamestop stock tanks again, wouldn’t I be an easy millionaire off a $100 investment?

>> No.29620958

I don't see you losing this desu. Either the entire market crashes and you get rich or GME pumps to fucking Saturn and drops down to 50 within a week

>> No.29621018

>>29620613
The volatility is not updated in your broker.

>> No.29621177

>>29620613
you will lose money

check em

>> No.29621289

>>29621177
holy kek

>> No.29621297

>>29621177
I mean, that’s a given

>> No.29621875
File: 299 KB, 1080x2460, Screenshot_20210224-204812.png [View same] [iqdb] [saucenao] [google]
29621875

Its wrong

>> No.29621939

>>29621875
What’s wrong? Please explain.

>> No.29621957

>>29621177
OP I hope you like sucking dick and eating ass

>> No.29622097

>>29620613
You realize no one will sell you those puts for 1 cent tomorrow right?

>> No.29622147

>>29620613
you've never done contracts have you?

>> No.29622343

>>29622147
Nope ;)

>> No.29622479

theres probably no bids so it just shows 1 cent. you will never get your order filled for that.

>> No.29622590

>>29622343
I wrote a 5 paragraph reply explaining why you were wrong and how options work but I don't think you would have learned from it so I'm just gonna say: kys faggot

>> No.29622662

>>29622590
I don’t believe you

If I get dubs you have to explain it to my dumb ass

>> No.29622799

I don't know why your prices are showing 0.01 but a puts on webull for this shows nearly 8000 at market close, will be even higher at open with the ah price

>> No.29622902

>>29622662
Each contract is for 100 shares so a price of 0.01 per share is $1 per contract. 10000 contracts is $10000. Option prices don't update after hours.

>> No.29623003

>>29621875
>chink technology
yeah ops broker is wrong lol

>> No.29623074

>>29620613
wait yea why cant we wait till like gme is 500 $ buy puts at 200-300, theres tno way gme in a year will be worth that much. And if anything its only 100 dollars. Holy f bro youre a fucking genius.

>> No.29623324

>>29623074
Because the puts are going to cost a lot, the break even will be like $40

>> No.29623369

>>29622902
>Each contract is for 100 shares so a price of 0.01 per share is $1 per contract.

Wrong, 100 shares are going for $0.01

>> No.29623540
File: 21 KB, 593x517, 1614017758782.jpg [View same] [iqdb] [saucenao] [google]
29623540

>>29623369
Wait... you don't understand what that .01 means?
It means .01 per share.
a contract is 100 shares.
Therefore, the cost of a single contract is 100 * .01 = $1.
Meaning, anon is 100% right, because that's fundamentally how options contracts work.
How, seriously, how did you misread that?

>> No.29623685

>>29623540
You are correct but OPs brokerage options pricing is not

>> No.29623700

>>29623540
10,000 contracts is not $10,000, like he said. It’s $100.

$.01x10,000 = $100

>> No.29623771

>>29621177
He is fucked

>> No.29623831

>>29620613
God imagine someone posting this on WSB

>> No.29623915

What is the potential risk in doing this? Theres no way that the max risk here is $100 with the potential to make a million. Otherwise everyone would be doing it.

>> No.29624013

>>29620613
>What am I missing here?
check the order book newfag

>> No.29624075

>>29623915
It’s probably just not gonna execute, had this happen to me numerous times on rob-you-good. They literally will not fill this order.

>> No.29624441
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29624441

>>29623700
You missed a step, anon.
it's not .01 * 10,000.
it's (price per share) * (number of shares per contract) * (number of contracts)
meaning:
(.01) * (100) * (10,000) or
$1 * 10,000 or
$10,000

You are still not understanding that 1 cent is not the price of a contract but the price per share to buy the contract and that there are a hundred shares in a contract, yielding a total of a dollar a contract in your (out of date) example. Furthermore, >>29623685 is right. Overnight the price changes per share regardless of what the market has posted. Meaning that tomorrow you're going to see similar numbers to what you see right now with those contracts surrounding your special 1 cent per share contract.
The breakeven is going to be the price of the contract more OR less the value of the stock's spot price (price in time or stock price), unless the value of the contract is statistically highly likely (near certainty) to expire worthless. That's when they get to a cent.

Now that it's far less than a near certainty the option will expire worthless, it's going to be worth, right then, a lot of money.

HOW IS THIS STILL CONFUSING

>> No.29624634

>>29623915
there is literally nobody selling those contracts. the volume is 0, so you can't buy it unless you want to fork over ~7k

>> No.29624734

>>29624075
>>29624634
So I'm guessing the only way something like this happens is if someone fat fingers their keypad?

>> No.29624840

>>29624075
The reason is that someone has to be on the other end of your contract.
If I order sell 1,000,000 shares of nokia for $10,000 the exchange will not just honor that order. I'd need 1,000,000 shares worth of suckers to pay that price when nokia is worth something like four dollars.
If you try and buy an order from yesterday that would be worth a lot today, you can't honestly believe that the price wouldn't adjust for it being worth more right now.

You need to look at the bid, ask, and last sale price.
bid: what people are willing to PAY for the option.
ask: what people are willing to be PAID for the option.
last sale: what people who were willing to pay AND be paid for the option and executed a transaction for.

example:
>bid: .07 x 3000
>ask: .10 x 3000
>last sale: .09 x 100
this would mean the ask is closer to the truth than the bid, and that .09 was the last price people were willing to both buy and sell for.

same example:
>you offer to sell and ask for .08 x 12
>the bid is still .07 x 3000
>your 12 contract share order is in priority ahead of the 3000 .10
>they will buy your .08 before the .10, your sell will execute, the last sale will be recorded as .08 x 12 once filled

Congratulations, you now understand, if you can read.

>> No.29624907

>>29624734
I had two options I bought that would have instantly made money the same day and neither got filled. Fuck robinhood.

>> No.29624974

>>29624840
>>29624441
I get it now. Thanks bros.

>> No.29625042

>>29620613
Infinite possible losses.

>> No.29625084

>>29624734
no, the bid is 1 cent, and nobody has an asking price. Robinhood just calculated it as 1 cent because the price is 0. But its not for sale at all.
Imagine you have a piece of art. Someone offers 1 cent for it. Just because they bid 1 cent doesn't mean anything, its not for sale

>> No.29625896

>>29623915
Yes, when you buy an option, the guaranteed loss is the amount you pay for the options you purchase. You, THEORETICALLY, have infinite potential gain until you factor in time.
Once you do factor time in, you have to accept the following:
Options EXPIRE. meaning, once a the expiration date is met and the market closes, that option EXPIRES.
If it's a call (where you agree to buy an option to buy the stock at a certain price now or before the expiration date) expires below what the strike price is, the option expires worthless.

Wheras if it's above that, it expires with worth - meaning you can exercise or sell the contract for a gain BEFORE it actually expires.

>tl;dr: when you buy an option you lose money up frot. when you sell you make money up front. the infinite potential to gain or lose is when you sell for a guaranteed gain, and vice versa. Go read investopedia or robinhood or get a college degree with articles for a much better, cleaner explanation with good examples. Not financial advice.

>> No.29626060

>>29625042
Buying puts doesn't have infinite possible losses. You are thinking of people who sell naked calls.

>> No.29626187

>>29626060
naked puts have the same risk retard.

>> No.29626242
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29626242

itt: fucking retards

>> No.29626312

reddit retard

get out.

>> No.29626569

>>29620613
bro if you don't know what you're doing then never try shorting stocks. When you go short the loses could be infinite. When you go long you only lose what you put but short could lose everything and more. There are people who have literally killed themselves over this.

>> No.29626892

>>29626060
shut the fuck up retard. If you short at $50 and now the thing mooned to $200 then you better start selling your house and moving back with your parents to be able to pay that giant debt. Retards that don't know what they are doing should never short. Even worse if it's puts we are talking about since 1 contract = 100 shares. If you're middle class and had several puts then your life is done my nigger. You will never be able to pay that debt.

>> No.29627015

>>29626187
Hes not selling puts retard he bought them

>> No.29627048

>>29626187
>naked puts
>buying puts
stop posting

>> No.29627063

>>29626892
Hes not shorting. He bought a put contract. Most he can lose is how much he paid for the contract

>> No.29628051

>>29627063
buying puts is a short position anon. You make money when the price goes down. All short positions (shorts) and only short positions make money when the price goes down.
All long positions (longs) and only long positions make money when the price goes up.
Straddle/Stangle positions (credit/debit spreads) make money when it "crabs" (goes up or down then the other way back to mostly the same price).

You can make money in any market.

>> No.29628172

>>29626892
spreads mitigate risk.
calendars mitigate over time value.
iron condors/butterflies mitigate over spot.

Why someone wouldn't just buy a put for the next week to cover an in the money put sell they made this week is a poor reason, regardless of what it is 99% of the time.

>> No.29628287

>>29628051
i meant shorting as in selling a borrowed stock.
this guy is saying that buying a put option is the same as that
>meaning you have infinite losses

>> No.29628811

>buying puts
>infinite losses
Holy fuck this board is pathetic

>> No.29629667

>>29626187
So confidently wrong lol

>> No.29630207

>>29624441
It's 10000 x 0.01 = $100. 20000 contracts would be $200 etc.

>> No.29630397
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29630397

>>29623369
lol holee fuck. This anon is gonna make it on their 500+ IQ alone.

>> No.29630414
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29630414

It’s after hours and nobody is selling puts at that price so it defaults to 0.01. You people are god damn idiots. You will never buy a single pit for that much.

>> No.29630613

>>29621177
HA

>> No.29630809

It literally cannot go tits up

>> No.29631006

The fact there are so many people in here who don’t know what it means to buy a put really says something. This board has been shit since reddit invasion

>> No.29631606

>>29626892
Shorts are not the same as puts faggot.

>> No.29631658
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29631658

>>29621177
RIP OP's portfolio

>> No.29632087

>>29620613
Fucking wild that theres call options spread from 3 dollars to 800

>> No.29632091

>biz has no idea how options work
the fact some of you retards are calling buying puts "shorting" and "infinite losses" just proves how retarded biz is

>> No.29632298

>>29620613
>he doesn't know that gme is going to turn around so hard that the value is going to rival tesla.

>> No.29632487
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29632487

6 800 puts for GME traded today lol
das neat

>> No.29632570

>>29632487
800 put?

>> No.29633252

>>29632570
Puts are contracts to give you the right to sell a security at the given price.
there are 6 contracts that were traded today that give the holder the right to sell 100 shares of GME for 800 a share.

>> No.29633318

>>29629667
>>29627048
>>29627015
None of you even understand what a naked put is.
I never said in my post to buy or sell a put.
None of you even understand the stock market, /biz/ is fucking retarded.

>> No.29633372

>>29633252
Everyone on this board is a goddamn retard.
You don't even understand what you are explaining.
Fucking /biz/

>> No.29633439

>>29621177
bro he loses a premium. big deal. The upside here is he becomes a millionaire. He obvouis doesnt have to exercise the put

>> No.29633508

>>29633252
whoever sold those cant know what hes doing

>> No.29633531

>>29633439
>bro he loses a premium
You can lose more than just the premium you goddamn retard.

>> No.29633561

>>29633372
explain where I'm wrong you fucking faggot

>> No.29633577

>>29633531
how so. Just dont exercise the fucking put

>> No.29633585

>>29623369
hahahahahahah
You will either become extremely poor or extremely rich, yea varily

>> No.29633687

>>29633508
no and they are absolute retards aswell. Nice premium tho

>> No.29633863

>>29630809
lol'd

>> No.29633877

>>29633531
>You can lose more than just the premium you goddamn retard

HEY RETARD

MAXIMUM YOU CAN LOSE WHEN BUYING OPTIONS, DOESN'T MATTER IF IT'S PUTS OR CALLS, IS JUST THE PREMIUM YOU PAID.

WRITING OPTIONS HAS THE POTENTIAL TO CAUSE YOU TO LOSE MORE THAN THE PREMIUM YOU GAINED.

>> No.29634016

>>29633877
ALSO OP IS TALKING ABOUT BUYING PUTS AKA MAXIMUM LOSS IS ONLY PREMIUM. WHY IS THIS BOARD SO RETARDED

>> No.29634314

>>29633877
>>29633877
Hes dunning-kruger personified, so confident and so fucking wrong lmao
must be a teenager.

>>29633508
>>29633687
whoever sold those Deep ITM puts made money, whoever bought them lost money.
When stock goes up, deep ITM put goes down in value.

Buying the rights to sell at 800, when the stock is at 50, 750$ value in a perfect market.
If GME moons to 200, the rights to sell at 800 is now only worth 600$ per share. get it?

Its easy to get switched up in options. Buying calls is bullish buying puts is bearish. But selling calls is bearish directionally and selling puts is bullish.

>> No.29634752

>>29633318
maximum loss on a naked put is the strike price less the premium. he wouldn't even accept it going that low he'd just buy back the option at that point. also, OP isn't selling puts much less naked puts, he's thinking about buying puts at a price that doesn't even exist and he has no idea what a premium is.

>> No.29634928
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29634928

>>29633877
>>29634314
You are kind of right, when you buy a put, the only loss you can take is that of the premium, but if you sell, the loss can be infinite.
"Well then I will just never sell"
Then your put will exercise and you will be forced to buy the shares to cover your bullshit.
https://www.youtube.com/watch?v=asZcTpruqSo
I mean you guys are using puts with infinite losses to do the same thing as a fucking call which is far safer yet you are calling other people retarded.

>> No.29635156

>>29634928
bro noone is talking about selling naked puts except for you
OP is talking about buying puts that he will never get at that price anyways.
Take your L and leave, its obvious you have no idea whats going on.

>> No.29635188

>>29634928
Where in the OP do you see him talking about writing puts? Fuck off retard. Also learn what cash secured puts are if you think puts can lead to infinite losses.

>> No.29635299
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29635299

>>29620613

Jesus christ learn how contracts work

A $100 contract costs 10k... the price of an option is multiplied times 100 because that's what an option is... the right to buy 100 shares of the underlying asset

>> No.29635765

>>29635156
>>29635188
Why exactly are you defending OP over something that has literally no use?
God, /biz/ is a bunch of fucking retarded apes arguing over where to fling their own shit.

>> No.29635969
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29635969

>>29635765
>im realizing im wrong so let me just bitch because i feel embarssed
lel
nothing feels better than humiliating a self-righteous retard

>> No.29636184

>>29635765
>defending OP
More like I'm correcting a retard

>> No.29636192

>>29635969
I have not been wrong a single time I have posted, and you projecting something over and over again because you are wrong will not change that.

>> No.29636433

>>29636192
>I have not been wrong a single time I have posted

>>29626187
literally posted saying naked puts have the same risk as buying parts

just admit you have no idea how options fully work

>> No.29636737

>>29636433
>buying parts
Can't spell correctly, cant space correctly.
Just go back to plebbit retard. I'm done giving this thread bumps, it can die along with your trash advice.

>> No.29636768

>>29621177
Lol
Checkem

>> No.29636819

>>29636737
If only your knowledge of puts was as half decent as your ability to move ignore arguments.

Goodbye faggot

>> No.29636996

>>29636192
Literally everything you have said is wrong. You can only lose the premium on a buy to open naked put. That said, OP doesn't know anything either since those .01 numbers are meaningless placeholders and those other asks for ITM puts are face-melting expensive at 6-8k a pop. Even OTM short term puts for strikes in the 50 range are showing asks around 20 on Fidelity, aka 2k a pop so if you are wrong you're gonna lose a lot if all you are doing is YOLO-ing off on a bunch of naked OTM put without a more advanced strat.

>> No.29637053

>>29635765

>Options have no use

Exhibit A

>>29635299

>> No.29637071

>>29636996
the retard was proven wrong multiple times but he keeps trying to mental gymnastic his way into thinking he's right.

>> No.29637168
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29637168

>>29620613
>off a $100 investment?
Don't you need to buy 100 shares meaning it's 1000 dollars?

>> No.29637362
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29637362

>>29637168
No one in this thread even understands how a put works, let alone a naked one.
They can't even present points, they talk like children.
Just let it die.

>> No.29637427

>>29637168
When you buy options (not sell, buy) you do not need to buy any shares upfront, only pay the contract premium, and can sell the option instead of ever exercising it and buying shares at all if you so choose (assuming you don't already have the shares covered), which is what most people do with an ITM option.

>> No.29637542

>>29636192
thanks for the chuckle faggot
I love how there's an entire thread of people just dedicated to calling you a retard
really makes my dick hard.
i know youre still in here reading this shit because your a typical dunning-kruger autist who cant admit hes wrong
stay mad faggot ;)

oh and just to dunk on you one last time. Naked puts don't expose you to infinite losses, because your maximum loss would just be the entire strike price. So whatever your loss iswould just be limited to (the entire price of the share at the given strike)*100*X number of contracts

Thank you for being my bitch, you little faggot

>> No.29637545

>>29637362
Good thing you're one of the so called children. Next time read up a book on options before acting like you know anything retard.

>> No.29637584

>>29637168
(when you write options, you don't need to buy or own shares upfront either, but you may eventually be forced to buy shares, or buy back the contract)

>> No.29637704

Seriously kids, options are complicated, and if you aren't an advanced trader, just fucking don't. Market makers use advanced pricing models to set their asks, and you *will* get boned if you go off half cocked.

>> No.29637790

>>29637542
>>29637545
You sound mad.

>> No.29637936

>>29637704
>and if you aren't an advanced trader, just fucking don't
One of the reasons why most brokers will limited your options functionality unless you talk to them directly.

Everyone should learn how to do covered calls though. One of the easiest ways to make money with little risk.

>> No.29637990

>>29637790
pretentious retards do in fact make me mad

>> No.29638001
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29638001

>>29621177
checked

>> No.29638172

>>29637936
This is true, it's a nice way to get a little premium at only the cost of limiting your upside in something you already HODL, but in general dicking around with options for most robin hood kiddies is a great way to flush away a lot of money on bad hunches or even get your whole portfolio liquidated out from under you. Which is always good for a laugh, at least.

>> No.29638554

>>29620613
only one way to find out

>> No.29638810

>>29638554
yeah by my math it can't go tits up
so theres probably something hidden that would destroy you

>> No.29639792
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29639792

Nobody in the entire board can explain options

>> No.29640100

>>29623831
they wouldn't go for it they're holding shares most of their accounts probably can't do options anyway

>> No.29640177

>>29639792
1 contract = 100 shares of values

calls = make money if price goes up
puts = make money if price goes down

>> No.29640364

>>29634928
Wrong. Selling to close does not obligate you the same way as selling to open. If you buy a put then sell it, your position is zero with no risk of "infinite losses"

>> No.29640689

The premium on those will be extremely high tomorrow at open because of volatility

>> No.29641123
File: 91 KB, 1626x876, Screen Shot 2021-02-24 at 11.33.56 PM.png [View same] [iqdb] [saucenao] [google]
29641123

>>29640689
yeah
its impossible to get them. just rh price they sticker on

>> No.29641278

>>29637053
god i do not fucking understand this shit, think i actually have to start reading

>> No.29642056

>>29640177
sell calls for premium is bearish
sell puts for premium is bullish

want to make money from premiums
covered call
you own the shares but are willing to sell at that strike price
cash secured put you have cash but want to lower you entry price

>> No.29643389

>>29641123
Did the same thing for a 95$ call

Obviously not going to go through, and I'm going to dump my bags back on the faggot redditors anyways.

>> No.29643454

>>29637936
>Everyone should learn how to do covered calls though. One of the easiest ways to make money with little risk.

Any good videos on this?

>> No.29643575

>>29623700
Wow you are actually retarded. No one tell him.

>> No.29643819

>>29621875
You did 2023 mong

>> No.29643921

>>29621939
Are you fucking serious?

>> No.29643988

>>29624974
Jesus please not this options bait anon again