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wondering if I should sell all of VOO because surely it won't stay this high, right? I can buy back some when it drops
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Jul 28, 2023 17:38
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ProperCoochie posted:wondering if I should sell all of VOO because surely it won't stay this high, right? I can buy back some when it drops This is the timing the market thread soooooooo.... yes Not financial advice™
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Jul 28, 2023 17:42
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Buy high, sell low, as I always say
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Jul 28, 2023 17:54
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On the one hand, things are feeling frothy as gently caress. On the other hand, rate hikes are over, core PCE is down to reasonable-ish levels today, lets gooooo On the other hand, the fed is likely to keep rates here until the wheels fall off. But are those wheels going to fall off 25% higher than here, and still end up higher than where we are at right now? ehhhh, definite possibility. I transitioned a significant amount of money into 5% yields, and am taking more off the top here. But I'm not feeling great about missing out on these gainz.
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Jul 28, 2023 17:57
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ProperCoochie posted:wondering if I should sell all of VOO because surely it won't stay this high, right? I can buy back some when it drops You'd need to ensure you don't get hit for a wash sale. You also run the risk of it not going back below where it is now for a while, if ever.
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Jul 28, 2023 18:21
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Of course I loaded up on some $F right before it cratered. gently caress this earth
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Jul 28, 2023 19:06
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Red posted:I see. Be a teacher in a district with a good pension. Seriously... as much as my wife complains about the pay right now, I have to keep reminding her that her pension is amazing. She essentially gets 75% of the average of their last 5 years teaching as a pension.
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Jul 28, 2023 20:20
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pmchem posted:google's CEO should be straight up fired quote:Polosukhin left early on, in 2017, to found a start-up called Near whose original idea was to use AI to teach computers to code but has since pivoted to blockchain payments. lol this is kind of sad.
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Jul 28, 2023 20:47
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Syrinxx posted:Of course I loaded up on some $F right before it cratered. gently caress this earth by "cratered" you mean it's down five percent, right?
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Jul 28, 2023 20:48
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The chart does not lie
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Jul 28, 2023 21:21
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I have never sold a covered call that didn't double in value within a week or two. This has never once happened when I bought a call. Just accept that the market hates you and God is trying to teach you a lesson about not worshipping Mammon every time you trade.
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Jul 28, 2023 21:46
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Subvisual Haze posted:I have never sold a covered call that didn't double in value within a week or two. This has never once happened when I bought a call. I sold a 9/15C on ABNB at $180 the other day. ~30% delta, but if it manages to gain another $30/share, I’ll be happy to sell it and surprised that it grew that much.
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Jul 28, 2023 22:09
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pmchem posted:google's CEO should be straight up fired It's pretty interesting, it's scorched into the brains of every silicon valley executive "we must learn from the mistakes of the Palo Alto Research Center" but that's easier said than done huh.
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Jul 29, 2023 13:51
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Leperflesh posted:by "cratered" you mean it's down five percent, right? Yes I know that's hyperbole (and I did average down a bit) but it's annoying how bad my timing has been on trades recently
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Jul 29, 2023 17:13
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Cacafuego posted:I sold a 9/15C on ABNB at $180 the other day. ~30% delta, but if it manages to gain another $30/share, I’ll be happy to sell it and surprised that it grew that much. I wish I understood what any of this means. Or maybe I'm glad I don't....
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Jul 29, 2023 19:11
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Astro7x posted:I wish I understood what any of this means. Or maybe I'm glad I don't.... Sorry for the gibberish. I own 100 shares of ABNB . I sold a covered call on those 100 shares that expires on 9/15/23 for a strike price of $180/share. I received a premium of $181 to sell the covered call. If the share price of ABNB is >$180 at market close on 9/15, my 100 shares will go to whoever bought the call and I will receive $18,000. If the share price is <$180 at market close on 9/15, I keep my shares and the premium and will likely sell another covered call at .30 delta for 1-2 months out. I don’t pretend to understand the Greeks (in this case, delta), but when selling covered calls or cash secured puts, I believe the current consensus for best return is selling them at 45-60 days out at around a delta of .30. Below that if you want to keep them and above that if you don’t. This is, of course, not an exact science and the strike price can shoot way above or below.
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Jul 29, 2023 19:48
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When you trade options you are also trading volatility. Blindly selling calls is as much gambling as buying them. You “probably” are at least harvesting variance risk premium, but you’re taking on all the downside risk and capping your upside. Consider just selling or trimming your position vs selling a call, in my anecdotal experience most of the time the former ended up being the right choice.
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Jul 29, 2023 23:20
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Pastrami posted:When you trade options you are also trading volatility. Blindly selling calls is as much gambling as buying them. You “probably” are at least harvesting variance risk premium, but you’re taking on all the downside risk and capping your upside. Consider just selling or trimming your position vs selling a call, in my anecdotal experience most of the time the former ended up being the right choice. You’re right about all of this, but this is the idiot gambling thread, so 
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Jul 30, 2023 00:03
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Astro7x posted:I wish I understood what any of this means. Or maybe I'm glad I don't.... Welcome to the wild and wonderful world of stock options, which for some reason this thread lacks any sort of effort-post on! I'll take a crack at it. A Goon Guide to Stock Options Ever since investing existed, those who took part have been looking for ways to hedge their holdings and speculate on future moves. This gave rise to the option: a promissory note that an investor could buy that gave them the right, but not the obligation, to buy or sell a given underlying stock or commodity at a set price at or prior to a given date. These were largely skeevy, under the table affairs (a reputation made worse by the role options played in Tulipmania and the fact that nobody actually forced you to honor options) until the 60's, when the Chicago Board of Options Exchange made a regulated market around it with the full backing of the SEC. Now, options contracts are a reliable means for modern day investors to buy insurance on stock they own, or to speculate on future moves without actually owning the stock. For simplicity's sake, I'm going to stick with options as they are handled by the CBOE within the US stock market. Other countries markets, and futures markets operate under different rules, and while a lot of the basic concepts are preserved across markets, some rules and numbers will differ. The basics The person who is holding, or bought the option contract is described as having a long position in the contract. I will use these words interchangeably. The person who wrote, or sold the option contract is described as having a short position. I will also use these words interchangeably. A Call is a contract that says that the holder may choose to force the writer to sell them 100 shares of a stock at a predetermined strike price at or prior to the expiration date. Or, mnemonically, the holder calls stock to themselves. As an example: Lets say a company named GoonCo is trading on the market for $100. I'm feeling a bit bullish on GoonCo and I see that GoonCo calls at a strike of $150 expiring next month cost $10. Rather than spend a bunch of money on GoonCo stock, I choose to buy the call and wait a month. If GoonCo stays less than $150, I'm out my ten bucks and nothing happens because the contract is now worthless. If GoonCo rises greater than $150, the contract is now "In the money", meaning that it's in a favorable position for me; let's keep the math easy and say GoonCo rocketed up to $200 during that month: now I'm in a very happy place! I can now choose to buy 100 shares GoonCo stock for $150, then immediately turn around and sell it on the market for $200, turning my $10 into $5,000 while doing what is called exercising the contract. At this point however, I should underscore that the scenario I described is a particularly dramatic win made to demonstrate the mechanics of the contract: lots of options beginners lose thousands in buying longshot speculative calls hoping for a scenario exactly like this to happen only to come up disappointed that their lottery tickets didn't pay. A Put is a contract that says that the holder may choose to force the writer to buy 100 of stock from them at a predetermined strike price at or prior to the expiration date. Mnemonically: the holder puts their stock on another. Going back to GoonCo, let's say I'm now bearish: they're trading at $200, but I think they're due to go down to $100, so I buy a put with a strike of $150 expiring next month, which coincidentally costs $10. Like with calls, if GoonCo doesn't go in the money (which is to say, $150 or less in the case of puts), I lose $10. Put if it does fall to $100, which is well in the money, then I'm happy again: now when I exercise the contract, I can turn around and buy a hundred $100 shares, and make the other guy buy them for $150, gaining $5000 in the process. Options Pricing While I arbitrarily selected $10 as the price of those options contracts, in reality the prices of options wibble and wobble and increase and decrease. While options prices, like any other price, are precipitated on supply and demand as people go about betting on the feelings of rich people, they are typically correlated by three things: 1. the price of the underlying stock, 2) the volatility of the price of the underlying stock, 3) time. These relationships are described by "The Greeks": Delta, Gamma, Theta, and Vega. There's all kinds of dry books by any number of internet fin-nerds if you want to study these at length, I'll keep the explanations bitesized here, explained in order of complexity (at least to me): Theta is dead loving easy: that's how much value the contract will lose today just by existing. As an options contract gets closer to its expiration date, it grows less and less valuable, until it's expiration date by which point it's either completely worthless (if out of the money) or worth the difference between 100 shares of the underlying at the strike price and 100 shares at the market price (if it's in the money; the name of the value that would be left at this point is called Intrinsic Value. The Extrinsic Value is the value that is or would be burned away by time). In any case, this means the long will always, absent any other move, lose money and the short will always, absent any other move, gain money. This is why I personally prefer to be on the selling side. I should note that Theta does increase as you draw closer to the expiration date, so options that expire tomorrow will lose value much faster than options that expire in 90 days. Vega is based on how people feel about the volatility of the underlying stock, or Implied Volatility. People are willing to pay more for options on swingier stocks as they try to hedge and speculate. This tends to be at its highest at earnings (for stocks) or large market reports (for ETFs), and at its lowest right after these events play out. Selling options right at earnings can be very profitable, for those willing to accept the risks. Delta is oversimplified as "how much money your contract moves as the underlying moves". So, if I had a 30 Delta Call, if the underlying went up by a dollar, my option price would go up by $30. However, delta is not static: Delta changes according to Gamma which also changes according to a big stack of other variables that you probably won't reasonably care about. The important thing is: the delta per 100 shares will always range from just above 0 to just less than 100, with deeper in the money contracts being closer to 100 Delta, most out of the money contracts being closer to 0 Delta, and the contracts closest to the market price of the underlying will be around 50 Delta. This can be used to express positions that predict a price range, rather than "number go up" or "number go down". Pictures and Strategy Okay, I hit you with some dry poo poo. Let's get some pictures and some plays I like (and don't like) doing. I personally like to visualize positions using https://optionstrat.com/. The Longs Let's get the longs from the basics out of the way, using SPY as an example:   As fun as the potential for infinite profits are, in reality this rarely works: more frequently the underlying stock move just isn't enough to overcome value lost to Theta, or time burning away the contract value. I don't personally like doing this for speculations. Instead, these are better employed as insurance or hedging for preexisting positions:  If I had 100 shares of SPY, but was worried about it potentially dipping, I can buy up a protective put: now if SPY dumpsters below $457, I wouldn't lose a penny more than $481. Without that protective put, I'd have kept losing and losing money. Calls may be used in a similar fashion to defend short positions from upward moves. The only single long I would personally willingly take is a very in the money (70-90 delta) Call with more than 90 days to expire, and even then I'd sell it before the 60 days to expire mark. This is called a LEAP, and makes for a good long term play if you think a stock is going up but don't want to buy shares. The Shorts For sellers of options, the P&L is the inverse of the longs:   Shorting options is characterized by limited gains (you are selling a contract at a set price, after all) with the risk of unlimited losses caused by adverse moves. This is an intimidating place to be: short option positions do tend to be statistically more likely to win, but a loss can lose you a few shirts. Such a position requires active management or hedging and still ties up a lot of margin, even if your broker lets you sell something like this (many won't). Fortunately, longs can also be used to hedge these to create Credit Spreads: Credit Spreads Take a short, hedge it with a long, and you have spreads. I personally like to use in the money credit spreads, which can benefit from moves, but moreso benefit from time:   Credit spreads could also be placed out of the money to speculate on future moves, but I personally don't think that plays to their strengths. Wheeling While I have not personally done this, the strategy every fin-nerd book will likely teach you first is "The Wheel". Since this requires having the money to buy 100 shares, it requires a lot of capital, but it does show how options can be used as a multi-part strategy, so here it is:  Step 1) Sell a cash covered put. It's just like a short put, but you happen to have the cash around to buy the stock. If it expires, repeat the step and get more commission. Otherwise, congratulations on buying the stock at a price you liked!  Step 2) Sell a covered call. It's just like a short call, but you happen to have the stock around to sell. If it expires, repeat the step and get more commission. Otherwise, congratulations, you sold the stock at a price you liked! The trouble with the wheel is, it is a strategy that can cause you to lose money to big swings in either step: at step 1, if the underlying tanks a bunch, then you're likely to be in the hole for a while unless you hedged with a long put. At step 2, if the gain is particularly large, then you would have missed out on it. Between these issues and the capital requirements, I don't personally do it. Playing Earnings with Strangles and Condors By far my favorite play is short strangle on earnings: remember all of that stuff I said about volatility and earnings back back when I was defining Vega in the greeks section? This is how you bank it.  Switching from a P&L for SPY to a play I'm actually in right now, this is Intel, and they just announced their earnings yesterday. The day before, I sold this position: A Call and a Put, both between 10-20 delta at the time, expiring at Sept 15th (A date selected for the following criteria: between 30-45 days, good options liquidity). Over the course of the day yesterday, the moves from the earnings report played out, and the price stayed perfectly within the happy zone. More importantly, however, all that volatility dried up, making a good chunk of profit from what is possible. I intend to exit once I get an unrealized profit of $44, or at the 21 DTE mark, whichever arrives first. If it should have a big swing, then I can roll the winning side to realize profits and wait for time to even out the position. Ideally, though, I'm anticipating closing this next week. (Edit: closed on the Monday following this post after hitting my target  )  Looking at a play that's making me work a little harder, an ABT earnings spread, you can see the side I rolled when the Call side went into the money on Wednesday. While the price has reverted to the center of the new spread and seems to be holding there, the position isn't quite in the green yet. But, time is once again on my side, it won't be long before this is back in the green. I suspect I'll be taking this to the 21DTE mark. (Edit: About three days after this post, the trend reversed and looked like it was going to continue onward to bust my put side. Since I was just a couple dollars shy of breaking even and was not liking how much of my margin buying power this position had started taking up, I closed it to redeploy my buying power elsewhere) Risk for Strangles is largely controlled by the width of the strangle itself, though a super long strangle won't profit nearly so much as a narrower one. You can also manage risk by rolling the untested side should the price look like it might bust out of the range, which moves the profit zone to a better location. Also, don't try to hold these things until expiration, sell at 21DTE at the latest. You have much less space to maneuver if you get an adverse movewithin that timeframe. For those who don't like the looks of those scary red cliffs on either side of the P&L graph, placing a long on either side to form iron condors are a good way to do a similar play which, despite earning significantly less, and often having a much smaller profit range, it also locks down the losses you can take if the price goes outside of your range. Since SOFI's earnings are coming up, here's an example of an IC P&L versus a Strangle.   Conclusion Options are a great tool for profiting in a market regardless of if the market goes up, down, or even sideways. They also help put a lot of control over what your risk is in the market, helping to hedge stock or other option positions. They also allow for a lot of speculation opportunities, especially with regards to more predictable variables such as time or volatility cycles. Of course, like anything in the stock market, they are not without dangers, and some pitfalls are especially big. Some additional reading: Positional Option Trading: An Advanced Guide - Book that was recently recommended to me in the discord. The Unlucky Investor's Guide to Options Trading - It's a bit one note in that it almost exclusively covers strangles, but if it's a thing you plan to do, it does give some good advice on specifically that. BurntCornMuffin fucked around with this message at 20:57 on Aug 1, 2023 |
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Jul 30, 2023 00:07
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Just something to note about selling options into earnings. The variance is extreme. You can have many easy wins then get absolutely devastated by a move like NVDA (which was something like a 6-sigma move). I recommend TINY sizing until you have really gotten killed a few times and understand what it feels like. I generally view it as gambling if you don’t have a specific feeling or volatility forecast on a stock. Do I do it sometimes? Yes to assuage boredom.
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Jul 30, 2023 04:19
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 (and nice effortpost BurntCorn) Baddog fucked around with this message at 04:27 on Jul 30, 2023 |
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Jul 30, 2023 04:21
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pmchem posted:google's CEO should be straight up fired pissing off all the people who invented the next big thing and having them go start another company that eats you alive is the official sport of silicon valley dating all the way back to the 1950s
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Jul 30, 2023 14:11
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Looking at your avatar while listening to The Great Gig in the Sky is a pretty cool experience fyi
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Jul 30, 2023 16:14
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BurntCornMuffin posted:Put if it does fall to $100, which is well in the money, then I'm happy again: now when I exercise the contract, I can turn around and buy a hundred $200 shares, and make the other guy buy them for $150, gaining $5000 in the process. Got this part a little off (change $200 to $100). Nice write up though!
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Jul 30, 2023 17:50
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Congrats to everyone who bought the dip on PLTR, tripled their money these past three months.
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Jul 31, 2023 15:32
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SOFI shining today!
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Jul 31, 2023 15:59
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latinotwink1997 posted:Got this part a little off (change $200 to $100). Nice write up though! Thanks for catching that! Fixed in the write up, along with some other bits I wasn't quite happy with. BurntCornMuffin fucked around with this message at 16:30 on Jul 31, 2023 |
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Jul 31, 2023 16:09
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Space Fish posted:Congrats to everyone who bought the dip on PLTR, tripled their money these past three months. Should have trusted the Thiel vampire magic.
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Jul 31, 2023 16:33
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cirus posted:SOFI shining today! Sold a bunch of $10 and $12.50 leaps for a fat profit, finally Even a broken clock is right twice a day Hadlock fucked around with this message at 17:24 on Jul 31, 2023 |
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Jul 31, 2023 17:20
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PLTR's flagship product is an investigation tool for piecing together OSINT data on suspects. Basically, professional estalking software for police/government. Creepiness aside, its application here is one of the less nonsensical AI pitches, as identifying someone via picture or posting style is a thing they're relatively decent at. Also I guess they've got an AI-assisted accounting/trading platform now?
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Jul 31, 2023 17:27
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BurntCornMuffin posted:Thanks for catching that! Fixed in the write up, along with some other bits I wasn't quite happy with. Yah nice work, agronox added it to the op.
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Jul 31, 2023 17:57
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Baddog posted:Yah nice work, agronox added it to the op. Not sure if your edit stuck. The OP says "(POST TRUNCATED DUE TO LENGTH LIMIT)" at the bottom.
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Jul 31, 2023 18:22
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Skunkduster posted:Not sure if your edit stuck. The OP says "(POST TRUNCATED DUE TO LENGTH LIMIT)" at the bottom. The link to BCM's post is within the section that talks about options. That "POST TRUNCATED" thing was a joke. It comes right after I say I have a source of persistent, repeatable alpha. Which is sort of like saying I've found the fountain of youth; if anyone had, they'd be very unlikely to be posting here about it. But it has confused at least three people so I should probably just axe that part.
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Jul 31, 2023 18:44
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So why is YELL up nearly 90% if they're folding?
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Jul 31, 2023 18:52
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The Door Frame posted:So why is YELL up nearly 90% if they're folding? People think that every bankrupt company is going to be able to pull a hertz now. Yellow is very bad though.
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Jul 31, 2023 18:54
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Baddog posted:People think that every bankrupt company is going to be able to pull a hertz now. Yellow is very bad though. Yeah, I've been following the strike and I don't think that anything good is going to happen to the company. Although, I did learn today in other bankrupt trucking news that Nikola Motors still exists and apparently has functional trucks now
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Jul 31, 2023 18:58
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The Door Frame posted:Although, I did learn today in other bankrupt trucking news that Nikola Motors still exists and apparently has functional trucks now Saw that too, an actual order from jbhunt for a number of trucks! Wild, I was sure they were dead. Still not eager to put any money on them, because the management team did seem dishonest as hell.
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Jul 31, 2023 19:17
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Baddog posted:People think that every bankrupt company is going to be able to pull a hertz now. GOON could use a +1,000% boost, who wants to push this dumpster out of the mud
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Jul 31, 2023 19:18
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Saw agronox's neglected hall of fame underneath the OP. Christ, I should be the change I want to see and post some trades. Selling puts isn't gonna make anyone a wheelbarrow of money, but here's what I threw down today. Don't have the highest conviction on this trade (betting that the pop from the contact news won't completely fade in the next 6 weeks). But archer does have an actually fly-able evtol, and did get more money from the air force today to continue developing it. Joby seems farther along, but archer is still less than a third of their market cap even after the pop today. The air force will probably continue keeping 2 suppliers viable. And I think that at least one of the majors will probably end up buying one or both of these companies, instead of building their own. So not a bad company to be short puts on.
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Jul 31, 2023 20:12
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Hello BFC, long time listener, first time caller I've been fortunate enough to have a few thousand shares of JNJ, and after misinterpreting it as junk / predatory mail, I realize I need to make a decision on exchanging some of it for "Kenvue". Has this come up at all? It sounds like JNJ spun off part of itself into a new company and I have the chance to trade in at a discount. Not sure if the cost basis is relevant but it's basically zero, so there are big tax implications to be aware of in case this creates a taxable event.
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Jul 31, 2023 22:47
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