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USA
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Posted: 1/14/2022 1:24:37 PM EST
[Last Edit: Vengeance6661]
[#1]
Quote HistoryOriginally Posted By myfakename: How is it dpls continues to drop? They are making money with some nice contracts, their ceo shitposts and Godzilla! I may have to buy more Tuesday. It doesn't make sense. Especially if this tweet is true. This seems like a big deal to me. Is there anyplace to actually verify this?
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Posted: 1/14/2022 1:33:54 PM EST
[#2]
Quote HistoryOriginally Posted By CajunMojo: Sorry to be blunt, but why TF would you risk your shares for basically nothing in premiums? ETA: This week's 3.5s are about the same price as next week's 4s if you are thinking of rolling. It ain't much but you could hold your shares a little longer and add .50 if they are called away next week. Next week, reassess and roll as you see fit. At least mine sorta kinda made sense. A while back with BBIG in the 2s I sold $4 calls a few weeks out for 0.32. Average cost about 3.58 at the time. That made sense, 9% monthly return on my original investment from call premiums, with downside of selling at a profit. More recently, as KaiK was talking about buying calls, I noticed somebody bidding 0.05 for $4.5 calls when my $4 calls were also bidding 0.05. I thought the 4.5s were overpriced, so sold some. After all, my 2.35 stock isn't going to 4.5 this month, right? And if it does, at least I'm out at a profit... Normally I don't sell options under ten cents, but when 5 cents is 2% of the current price, and the strike price is double the current price, what can go wrong? Well, the last few days we saw what could go wrong. |
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GA, USA
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Posted: 1/14/2022 1:36:19 PM EST
[#3]
Quote HistoryOriginally Posted By nolan7120: Keep in mind if you do that you'll get hit with a wash sale. Quote HistoryOriginally Posted By nolan7120: Originally Posted By 70satvert: Originally Posted By KaiK: Originally Posted By 70satvert: Lol my average for BBIG is $8.59 and they’re getting called away today for $3.50. FML. Geeee. The calls I sold that got me in this position netted me 8 whole dollars. All I can do is laugh. I’ll just rebuy on Monday. Keep in mind if you do that you'll get hit with a wash sale. Just roll them. |
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Posted: 1/14/2022 1:58:25 PM EST
[#4]
Quote HistoryOriginally Posted By PepePewPew: At least mine sorta kinda made sense. A while back with BBIG in the 2s I sold $4 calls a few weeks out for 0.32. Average cost about 3.58 at the time. That made sense, 9% monthly return on my original investment from call premiums, with downside of selling at a profit. More recently, as KaiK was talking about buying calls, I noticed somebody bidding 0.05 for $4.5 calls when my $4 calls were also bidding 0.05. I thought the 4.5s were overpriced, so sold some. After all, my 2.35 stock isn't going to 4.5 this month, right? And if it does, at least I'm out at a profit... Normally I don't sell options under ten cents, but when 5 cents is 2% of the current price, and the strike price is double the current price, what can go wrong? Well, the last few days we saw what could go wrong. Quote HistoryOriginally Posted By PepePewPew: Originally Posted By CajunMojo: Sorry to be blunt, but why TF would you risk your shares for basically nothing in premiums? ETA: This week's 3.5s are about the same price as next week's 4s if you are thinking of rolling. It ain't much but you could hold your shares a little longer and add .50 if they are called away next week. Next week, reassess and roll as you see fit. At least mine sorta kinda made sense. A while back with BBIG in the 2s I sold $4 calls a few weeks out for 0.32. Average cost about 3.58 at the time. That made sense, 9% monthly return on my original investment from call premiums, with downside of selling at a profit. More recently, as KaiK was talking about buying calls, I noticed somebody bidding 0.05 for $4.5 calls when my $4 calls were also bidding 0.05. I thought the 4.5s were overpriced, so sold some. After all, my 2.35 stock isn't going to 4.5 this month, right? And if it does, at least I'm out at a profit... Normally I don't sell options under ten cents, but when 5 cents is 2% of the current price, and the strike price is double the current price, what can go wrong? Well, the last few days we saw what could go wrong. So you got greedy & didn't think through the implications of why options all of a sudden got so relatively valuable (expensive) i.e. the risk you were being compensated for taking on as a seller. It doesn't sorta kinda make sense to sell calls when they start spiking for no reason on a hyper volatile stock - it's..... well I think you know what "it" is. No offense or anything, I've gotten some very expensive educations on this stuff too 
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Posted: 1/14/2022 1:59:40 PM EST
[#5]
Quote HistoryOriginally Posted By Vengeance6661: It doesn't make sense. Especially if this tweet is true. This seems like a big deal to me. Is there anyplace to actually verify this?
So you want to check the pipelines to see if they are getting checked by DPLS/Optilan? Seems like a lot of checking going on.  
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Posted: 1/14/2022 2:01:43 PM EST
[#6]
Quote HistoryOriginally Posted By KaiK: Here is why I bought near 100 MVIS calls now for next week. Max pain for next week is $7. It hit a 52 week low today. And it's due a dead cat bounce. And they were super cheap. Anyone have the short interest data? That would require it to actually go up. Which it hasn't done since June. Color me skeptical  
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USA
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Posted: 1/14/2022 2:07:42 PM EST
[#7]
Quote HistoryOriginally Posted By Total53: So you want to check the pipelines to see if they are getting checked by DPLS/Optilan? Seems like a lot of checking going on. https://media.giphy.com/media/KbvZsN07K9Hy9ZoyR7/giphy.gif I'd like a check for a million dollars but that ain't ever gonna happen given the state of current affairs. |
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Posted: 1/14/2022 2:11:13 PM EST
[#8]
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Posted: 1/14/2022 2:12:35 PM EST
[#9]
Quote HistoryOriginally Posted By m6z: What the hell happened to ME? It's currently $5. I'm down 50%. Welcome to the party. I'm down 58%. It went to shit directly after the name change and new listing on the stock market. Another of those I should have sold during the hype. |
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Posted: 1/14/2022 2:13:51 PM EST
[#10]
Quote HistoryOriginally Posted By clausewitz8: So you got greedy & didn't think through the implications of why options all of a sudden got so relatively valuable (expensive) i.e. the risk you were being compensated for taking on as a seller. It doesn't sorta kinda make sense to sell calls when they start spiking for no reason on a hyper volatile stock - it's..... well I think you know what "it" is. No offense or anything, I've gotten some very expensive educations on this stuff too If somebody is bidding up the 4.5 calls two weeks away, to where they match the 4.0 calls (I think the 4.5s were 0.05x0.06 and 4s were 0.05x0.07), I guess I should have taken a flyer on a bull call spread instead of shorting the most overvalued call. If I'd bought 50 4s at .06 or .07 and sold 50 4.5s at .05, look where I'd be now. |
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Posted: 1/14/2022 2:15:57 PM EST
[#11]
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Posted: 1/14/2022 2:27:20 PM EST
[#12]
Quote HistoryOriginally Posted By CajunMojo: Sorry to be blunt, but why TF would you risk your shares for basically nothing in premiums? ETA: This week's 3.5s are about the same price as next week's 4s if you are thinking of rolling. It ain't much but you could hold your shares a little longer and add .50 if they are called away next week. Next week, reassess and roll as you see fit. If you were holding bbag, selling calls was the only thing to do to keep sane. It was a pretty steady decline, no good news, no nothing. Similar to Mavis. This spike has nothing to do with anything that could be found doing DD. I was selling calls for small premiums for weeks. Little movement until a few days ago. It is a gamble that they weren't going to be called away. I bought a few back and rolled some out. No idea whats going to happen next week. |
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Posted: 1/14/2022 2:31:58 PM EST
[#13]
90 minute battle for $4 BBIG, choose your weapon.
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Posted: 1/14/2022 2:41:57 PM EST
[#14]
Quote HistoryOriginally Posted By Total53: 90 minute battle for $4 BBIG, choose your weapon. https://media.giphy.com/media/dU5veLjgCF14n3Q7cg/giphy.gif My weapon is a girl in heels and a bikini doing a hand stand. 
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Posted: 1/14/2022 2:43:40 PM EST
[#15]
Quote HistoryOriginally Posted By myfakename: My weapon is a girl in heels and a bikini doing a hand stand. https://media1.giphy.com/media/ZjC0fhMfa54oJY9HaR/giphy.gif?cid=69f1a12dca327e5756fa971e7e0fa6391440ad5d85b319f9&rid=giphy.gif&ct=g  
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Posted: 1/14/2022 2:44:48 PM EST
[#16]
Okay, I wussed out on the big drop and sold.
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Posted: 1/14/2022 2:45:10 PM EST
[#17]
Quote HistoryOriginally Posted By myfakename: This spike has nothing to do with anything that could be found doing DD. Correct, but there were two signals foretelling the spike, one revealed in this thread, one randomly noticed by me: KaiK announced, for whatever reason, a strong desire to buy OTM calls on BBIG. Somebody, not KaiK, pushed the price of next week's 4.50 calls beyond reasonable comparison to 4.00 calls, when the underlying price was about 2.35 IIRC. With hindsight, we might say that somebody knew something a week in advance, and chose the 1-21-2022 4.50s as their vehicle to ride the coming wave. There have been a lot of times in the past 3 months that instead of selling cheap options, I chose to sell no options at all. And before this week, I would have been better off to have sold those cheap options. I'm still there with MVIS. With MVIS average cost about double current share price, writing any options with a substantial payout would mean writing at strike prices deep below my cost. With my lowest strike options OTM ($4 vs 3.94), all I've really lost is opportunity cost, but that lost opportunity really did cost me thousands of $$. I'm referring to the opportunity today to sell options at $0.40-0.70 instead of the 0.05-0.15 I already sold them for. |
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Posted: 1/14/2022 2:45:37 PM EST
[#18]
Quote HistoryOriginally Posted By apexcrusade: What is Max Pain again - price at short interest resistance? The amount where the people who bought options lose the most money. And the people who sold them make the most. |
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Posted: 1/14/2022 2:46:18 PM EST
[#19]
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Posted: 1/14/2022 2:47:00 PM EST
[#20]
Quote HistoryOriginally Posted By KaiK: Okay, I wussed out on the big drop and sold. Noooooooo! 
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Posted: 1/14/2022 2:47:45 PM EST
[#21]
Now sexy MVIS needs to take off next week. I may have bought 200 calls.
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Posted: 1/14/2022 2:48:27 PM EST
[#22]
Quote HistoryI was only like 500% up on them. 
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USA
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Posted: 1/14/2022 3:00:54 PM EST
[#23]
Down $20 on BBIG. Do I sell for the small loss. Any chance of it getting to $4.38?
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Posted: 1/14/2022 3:02:06 PM EST
[#24]
Quote HistoryOriginally Posted By Vengeance6661: Down $20 on BBIG. Do I sell for the small loss. Any chance of it getting to $4.38? it hit $4.32 during the day today, so I'd say chances are at least decent |
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Posted: 1/14/2022 3:03:55 PM EST
[#25]
Quote HistoryOriginally Posted By myfakename: My weapon is a girl in heels and a bikini doing a hand stand. https://media1.giphy.com/media/ZjC0fhMfa54oJY9HaR/giphy.gif?cid=69f1a12dca327e5756fa971e7e0fa6391440ad5d85b319f9&rid=giphy.gif&ct=g Quote HistoryOriginally Posted By myfakename: Originally Posted By Total53: 90 minute battle for $4 BBIG, choose your weapon. https://media.giphy.com/media/dU5veLjgCF14n3Q7cg/giphy.gif My weapon is a girl in heels and a bikini doing a hand stand. https://media1.giphy.com/media/ZjC0fhMfa54oJY9HaR/giphy.gif?cid=69f1a12dca327e5756fa971e7e0fa6391440ad5d85b319f9&rid=giphy.gif&ct=g  |
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Posted: 1/14/2022 3:07:07 PM EST
[#26]
Quote HistoryOriginally Posted By Vengeance6661: Down $20 on BBIG. Do I sell for the small loss. Any chance of it getting to $4.38? $4.11 now, she's making a power hour move W/out Kaik so it seems. 
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Posted: 1/14/2022 3:11:36 PM EST
[#27]
Awww damn, it's going back up with a bunch of buying pressure.
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Posted: 1/14/2022 3:12:28 PM EST
[#28]
Quote HistoryOriginally Posted By Total53: $4.11 now, she's making a power hour move W/out Kaik so it seems. I still have 2500 shares. I'm going to be sad Tuesday it it hits $10. |
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Posted: 1/14/2022 3:16:13 PM EST
[#29]
Quote HistoryOriginally Posted By PepePewPew: If somebody is bidding up the 4.5 calls two weeks away, to where they match the 4.0 calls (I think the 4.5s were 0.05x0.06 and 4s were 0.05x0.07), I guess I should have taken a flyer on a bull call spread instead of shorting the most overvalued call. If I'd bought 50 4s at .06 or .07 and sold 50 4.5s at .05, look where I'd be now. Quote HistoryOriginally Posted By PepePewPew: Originally Posted By clausewitz8: So you got greedy & didn't think through the implications of why options all of a sudden got so relatively valuable (expensive) i.e. the risk you were being compensated for taking on as a seller. It doesn't sorta kinda make sense to sell calls when they start spiking for no reason on a hyper volatile stock - it's..... well I think you know what "it" is. No offense or anything, I've gotten some very expensive educations on this stuff too If somebody is bidding up the 4.5 calls two weeks away, to where they match the 4.0 calls (I think the 4.5s were 0.05x0.06 and 4s were 0.05x0.07), I guess I should have taken a flyer on a bull call spread instead of shorting the most overvalued call. If I'd bought 50 4s at .06 or .07 and sold 50 4.5s at .05, look where I'd be now. See, now you're being more clever. Money well spent then.  But I'd take issue with you're assuming 4.5 is more overvalued than 4, when that's not necessarily the case when considering the greeks and potential profits. Basically a better way to look at the spread closing up like that is, the market is saying those two positions are becoming much more equivalently likely (if you're selling that's obviously concerning). Except the higher one 4.5 in this case has higher potential, as it moves from OTM-ATM-DTM delta 4.5 will still be climbing when 4 is ~1, vega will be higher, gamma higher, etc as it moves down the chain and becomes priced to it's intrinsic vs extrinsic value. All any of these numbers mean big picture is pricing in probabilities according to the modified black scholes model which is an alegebra equation where you're solving for IV. The secret sauce you're missing here is that you're talking in terms of price, 1 of what 6? factors involved in determining the IV. Future volatility is the only factor we don't know when calculating an option's value. We have all other inputs that make up the intrinsic & extrinsic value to get the price. You're selling rapidly climbing IV on a stock that's gone up 247% per share in the space of 4 days just a couple months ago. While the IV30 is over 100 points higher than HV30, that's not good, a normal IV spread is like 5-20. |
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Posted: 1/14/2022 3:17:19 PM EST
[#30]
Quote HistoryOriginally Posted By KaiK: I still have 2500 shares. I'm going to be sad Tuesday it it hits $10. What makes you think it will hit $10, on a Tuesday? I'm not made, and grabbed another 100 this morning. Only 600 now and some 1/21 calls. |
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Posted: 1/14/2022 3:18:21 PM EST
[#31]
Up $44 MVIS. Killing it.
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Posted: 1/14/2022 3:20:28 PM EST
[Last Edit: KaiK]
[#32]
Quote HistoryOriginally Posted By evo7011: What makes you think it will hit $10, on a Tuesday? I'm not made, and grabbed another 100 this morning. Only 600 now and some 1/21 calls. Dreams. Lol. No press release and I don't think it will |
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Posted: 1/14/2022 3:21:27 PM EST
[#33]
I wish I knew WTF you just said!
 Quote HistoryOriginally Posted By clausewitz8: See, now you're being more clever. Money well spent then. But I'd take issue with you're assuming 4.5 is more overvalued than 4, when that's not necessarily the case when considering the greeks and potential profits. Basically a better way to look at the spread closing up like that is, the market is saying those two positions are becoming much more equivalently likely (if you're selling that's obviously concerning). Except the higher one 4.5 in this case has higher potential, as it moves from OTM-ATM-DTM delta 4.5 will still be climbing when 4 is ~1, vega will be higher, gamma higher, etc as it moves down the chain and becomes priced to it's intrinsic vs extrinsic value. All any of these numbers mean big picture is pricing in probabilities according to the modified black scholes model which is an alegebra equation where you're solving for IV. The secret sauce you're missing here is that you're talking in terms of price, 1 of what 6? factors involved in determining the IV. Future volatility is the only factor we don't know when calculating an option's value. We have all other inputs that make up the intrinsic & extrinsic value to get the price. You're selling rapidly climbing IV on a stock that's gone up 247% per share in the space of 4 days just a couple months ago. While the IV30 is over 100 points higher than HV30, that's not good, a normal IV spread is like 5-20. |
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Posted: 1/14/2022 3:24:22 PM EST
[#34]
Quote HistoryOriginally Posted By steviesterno16: I got $100 says you don't buy nothing on monday :P Ah, yes, milkday is next week. And I just noticed that the markets are closed June 20th, which we're calling Juneteenth this year. We don't close the markets on July 5 if Independence day is a Sunday, do we? |
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Posted: 1/14/2022 3:24:24 PM EST
[#35]
Quote HistoryOriginally Posted By CajunMojo: I wish I knew WTF you just said! https://media.giphy.com/media/3o7qE1Thg4KxFpMGSk/giphy.gif No clue what he said either but I like this better than the red shit. 
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Posted: 1/14/2022 3:26:45 PM EST
[#36]
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Posted: 1/14/2022 3:29:12 PM EST
[#37]
Quote HistoryOriginally Posted By clausewitz8: See, now you're being more clever. Money well spent then. But I'd take issue with you're assuming 4.5 is more overvalued than 4, No amount of playing with your Greeks is going to end up with 4.5=4.0. When the bid on the 4.5 is 0.05, and the bid on the 4.0 is 0.05, something's fishy, or somebody's splitting the bid-ask spread. It was only bidding a few contracts, so I assumed the latter, but I offered 10 and they grabbed all ten. |
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GA, USA
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Posted: 1/14/2022 3:32:18 PM EST
[#38]
I'm glad I decided to sell my BBIG calls instead of rolling them today.
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Posted: 1/14/2022 3:36:02 PM EST
[#39]
Awww damn it looks like it's doing another flag.
 Attached FileI'm going to use this on my self if it rockets again.  Attached File |
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Posted: 1/14/2022 3:38:23 PM EST
[Last Edit: clausewitz8]
[#40]
Quote HistoryOriginally Posted By CajunMojo: I wish I knew WTF you just said! https://media.giphy.com/media/3o7qE1Thg4KxFpMGSk/giphy.gif Quote HistoryOriginally Posted By CajunMojo: I wish I knew WTF you just said! https://media.giphy.com/media/3o7qE1Thg4KxFpMGSk/giphy.gif Originally Posted By clausewitz8: See, now you're being more clever. Money well spent then. But I'd take issue with you're assuming 4.5 is more overvalued than 4, when that's not necessarily the case when considering the greeks and potential profits. Basically a better way to look at the spread closing up like that is, the market is saying those two positions are becoming much more equivalently likely (if you're selling that's obviously concerning). Except the higher one 4.5 in this case has higher potential, as it moves from OTM-ATM-DTM delta 4.5 will still be climbing when 4 is ~1, vega will be higher, gamma higher, etc as it moves down the chain and becomes priced to it's intrinsic vs extrinsic value. All any of these numbers mean big picture is pricing in probabilities according to the modified black scholes model which is an alegebra equation where you're solving for IV. The secret sauce you're missing here is that you're talking in terms of price, 1 of what 6? factors involved in determining the IV. Future volatility is the only factor we don't know when calculating an option's value. We have all other inputs that make up the intrinsic & extrinsic value to get the price. You're selling rapidly climbing IV on a stock that's gone up 247% per share in the space of 4 days just a couple months ago. While the IV30 is over 100 points higher than HV30, that's not good, a normal IV spread is like 5-20. Options are priced according to their intrinsic value - if you have a contract to buy for $75 per share and it's $80 per share, your intrinsic value is $5 per share. 100 share = $500 and their extrinsic value - Your extrinsic value is the value of time and price fluctuations. How that's calculated is complicated but it follows a mathematical formula called the black scholes model. What we don't know and have no way of knowing is the future price of the stock when your option expires. How that's priced in is through something called implied volatility. Implied volatility isn't arbitrary, it's whatever gets you to the current price given the other factors (extrinsic and intrinsic) that make up the model. You solve for X just like algebra back in school. If IV is climbing that means possiblities for large fluctuations are being priced into the model & you're either paying for that potential (buying) or being compensated for that potential (selling). If you're selling potentially huge fluctuations, it's not smart to not protect yourself against the possibility that you're wrong. Because you're not adequately compensated for that risk being realized. Like for example if you took a job with the potential for getting permanently crippled or killed, you'll get paid extra for taking that risk & you're willing to take the risk because you think the odds nothing will happen are still very much in your favor. Perfectly reasonable, but the higher that risk you'll be crippled becomes then the less attractive the higher salary becomes. So you'd be smart to buy insurance if you're gonna take that risk because your salary isn't going to be enough to cover you losing your legs or something. If you're only thinking in terms of the salary, you're not seeing the whole picture, right? I'm trying to explain how to see the whole picture. |
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Posted: 1/14/2022 3:42:22 PM EST
[#41]
Quote HistoryOriginally Posted By myfakename: My weapon is a girl in heels and a bikini doing a hand stand. https://media1.giphy.com/media/ZjC0fhMfa54oJY9HaR/giphy.gif?cid=69f1a12dca327e5756fa971e7e0fa6391440ad5d85b319f9&rid=giphy.gif&ct=g  Attached File |
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Posted: 1/14/2022 3:43:49 PM EST
[#42]
Quote HistoryOriginally Posted By KaiK: This is all the dumb shit I did today. https://www.ar15.com/media/mediaFiles/173565/Screenshot_20220114-142242_thinkorswim_j-2240301.JPG  Attached File |
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Posted: 1/14/2022 3:43:56 PM EST
[#43]
Quote HistoryOriginally Posted By clausewitz8: Options are priced according to their intrinsic value - if you have a contract to buy for $75 per share and it's $80 per share, your intrinsic value is $5 per share. 100 share = $500 and their extrinsic value - Your extrinsic value is the value of time and price fluctuations. How that's calculated is complicated but it follows a mathematical formula called the black scholes model. What we don't know and have no way of knowing is the future price of the stock when your option expires. How that's priced in is through something called implied volatility. Implied volatility isn't arbitrary, it's whatever gets you to the current price given the other factors (extrinsic and intrinsic) that make up the model. You solve for X just like algebra back in school. If IV is climbing that means possiblities for large fluctuations are being priced into the model & you're either paying for that potential (buying) or being compensated for that potential (selling). If you're selling potentially huge fluctuations, it's not smart to not protect yourself against the possibility that you're wrong. Because you're not adequately compensated for that risk being realized. Like for example if you took a job with the potential for getting permanently crippled or killed, you'll get paid extra for taking that risk & you're willing to take the risk because you think the odds nothing will happen are still very much in your favor. Perfectly reasonable, but the higher that risk you'll be crippled becomes then the less attractive the higher salary becomes. So you'd be smart to buy insurance if you're gonna take that risk because your salary isn't going to be enough to cover you losing your legs or something. If you're only thinking in terms of the salary, you're not seeing the whole picture, right? I'm trying to explain how to see the whole picture. Since we've already sold calls on this out-of-control motherfucker, how do we protect ourselves? |
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Posted: 1/14/2022 3:46:37 PM EST
[#44]
Quote HistoryOriginally Posted By PepePewPew: No amount of playing with your Greeks is going to end up with 4.5=4.0. When the bid on the 4.5 is 0.05, and the bid on the 4.0 is 0.05, something's fishy, or somebody's splitting the bid-ask spread. It was only bidding a few contracts, so I assumed the latter, but I offered 10 and they grabbed all ten. Quote HistoryOriginally Posted By PepePewPew: Originally Posted By clausewitz8: See, now you're being more clever. Money well spent then. But I'd take issue with you're assuming 4.5 is more overvalued than 4, No amount of playing with your Greeks is going to end up with 4.5=4.0. When the bid on the 4.5 is 0.05, and the bid on the 4.0 is 0.05, something's fishy, or somebody's splitting the bid-ask spread. It was only bidding a few contracts, so I assumed the latter, but I offered 10 and they grabbed all ten. If you were trying to prove to me you don't get it, you succeeded. Look at this wild as shit going on in Exxon too! 77.5 doesn't equal 78 and the bid's between those two options is only $0.01!!!! Things are fishy everywhere, it's all rigged!!  Attached File |
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USA
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Posted: 1/14/2022 3:48:34 PM EST
[Last Edit: Vengeance6661]
[#45]
Little win for me fellas. Got our of PMI on our mortgage. Another $105/mo back in my pocket. Only took four years to pay down 20%. I'll take some pats on the back....or butt
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Posted: 1/14/2022 3:49:49 PM EST
[#46]
Quote HistoryOriginally Posted By clausewitz8: Options are priced according to their intrinsic value - if you have a contract to buy for $75 per share and it's $80 per share, your intrinsic value is $5 per share. 100 share = $500 and their extrinsic value - Your extrinsic value is the value of time and price fluctuations. How that's calculated is complicated but it follows a mathematical formula called the black scholes model. What we don't know and have no way of knowing is the future price of the stock when your option expires. How that's priced in is through something called implied volatility. Implied volatility isn't arbitrary, it's whatever gets you to the current price given the other factors (extrinsic and intrinsic) that make up the model. You solve for X just like algebra back in school. If IV is climbing that means possiblities for large fluctuations are being priced into the model & you're either paying for that potential (buying) or being compensated for that potential (selling). If you're selling potentially huge fluctuations, it's not smart to not protect yourself against the possibility that you're wrong. Because you're not adequately compensated for that risk being realized. Like for example if you took a job with the potential for getting permanently crippled or killed, you'll get paid extra for taking that risk & you're willing to take the risk because you think the odds nothing will happen are still very much in your favor. Perfectly reasonable, but the higher that risk you'll be crippled becomes then the less attractive the higher salary becomes. So you'd be smart to buy insurance if you're gonna take that risk because your salary isn't going to be enough to cover you losing your legs or something. If you're only thinking in terms of the salary, you're not seeing the whole picture, right? I'm trying to explain how to see the whole picture. Quote HistoryOriginally Posted By clausewitz8: Originally Posted By CajunMojo: I wish I knew WTF you just said! https://media.giphy.com/media/3o7qE1Thg4KxFpMGSk/giphy.gif Originally Posted By clausewitz8: See, now you're being more clever. Money well spent then. But I'd take issue with you're assuming 4.5 is more overvalued than 4, when that's not necessarily the case when considering the greeks and potential profits. Basically a better way to look at the spread closing up like that is, the market is saying those two positions are becoming much more equivalently likely (if you're selling that's obviously concerning). Except the higher one 4.5 in this case has higher potential, as it moves from OTM-ATM-DTM delta 4.5 will still be climbing when 4 is ~1, vega will be higher, gamma higher, etc as it moves down the chain and becomes priced to it's intrinsic vs extrinsic value. All any of these numbers mean big picture is pricing in probabilities according to the modified black scholes model which is an alegebra equation where you're solving for IV. The secret sauce you're missing here is that you're talking in terms of price, 1 of what 6? factors involved in determining the IV. Future volatility is the only factor we don't know when calculating an option's value. We have all other inputs that make up the intrinsic & extrinsic value to get the price. You're selling rapidly climbing IV on a stock that's gone up 247% per share in the space of 4 days just a couple months ago. While the IV30 is over 100 points higher than HV30, that's not good, a normal IV spread is like 5-20. Options are priced according to their intrinsic value - if you have a contract to buy for $75 per share and it's $80 per share, your intrinsic value is $5 per share. 100 share = $500 and their extrinsic value - Your extrinsic value is the value of time and price fluctuations. How that's calculated is complicated but it follows a mathematical formula called the black scholes model. What we don't know and have no way of knowing is the future price of the stock when your option expires. How that's priced in is through something called implied volatility. Implied volatility isn't arbitrary, it's whatever gets you to the current price given the other factors (extrinsic and intrinsic) that make up the model. You solve for X just like algebra back in school. If IV is climbing that means possiblities for large fluctuations are being priced into the model & you're either paying for that potential (buying) or being compensated for that potential (selling). If you're selling potentially huge fluctuations, it's not smart to not protect yourself against the possibility that you're wrong. Because you're not adequately compensated for that risk being realized. Like for example if you took a job with the potential for getting permanently crippled or killed, you'll get paid extra for taking that risk & you're willing to take the risk because you think the odds nothing will happen are still very much in your favor. Perfectly reasonable, but the higher that risk you'll be crippled becomes then the less attractive the higher salary becomes. So you'd be smart to buy insurance if you're gonna take that risk because your salary isn't going to be enough to cover you losing your legs or something. If you're only thinking in terms of the salary, you're not seeing the whole picture, right? I'm trying to explain how to see the whole picture. Good explanation. What sort of protection (hedge) would you suggest for some of the guys here who sold calls for jack and now may lose their shares below cost basis? I'm thinking of options (no pun intended) to turn some bags into profits aside from holding and waiting. |
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Posted: 1/14/2022 3:51:18 PM EST
[#47]
Quote HistoryOriginally Posted By Vengeance6661: Little win for me fellas. Got our of PMI on our mortgage. Another $105/mo back in my pocket. Only took four years to pay down 20%. I'll take some pats on the back....or butt  Attached File |
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Posted: 1/14/2022 3:57:32 PM EST
[#48]
Quote HistoryOriginally Posted By Vengeance6661: Little win for me fellas. Got our of PMI on our mortgage. Another $105/mo back in my pocket. Only took four years to pay down 20%. I'll take some pats on the back....or butt 
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Posted: 1/14/2022 3:57:52 PM EST
[#49]
Quote HistoryOriginally Posted By KaiK: Here is why I bought near 100 MVIS calls now for next week. Max pain for next week is $7. It hit a 52 week low today. And it's due a dead cat bounce. And they were super cheap. Anyone have the short interest data? ask for MVIS Jan 28th '5 on etrade jumped to 0.40. weird. |
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Posted: 1/14/2022 3:57:53 PM EST
[#50]
After Hours - it's like the wild, wild west! Here we go!!!
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