Options Trading

[Anonymous No.26036333]

Degenerate NEET here, took me two years to wrap my head around the crypto markets. I’m up 3,500% and am starting to feeling like diversifying into other markets. I keep seeing gain/loss porn on Options trading but I’m having a hard time wrapping my head around it. Of course I can google around but again I’m a degenerate NEET and I know one of you retarded geniuses could probably explain it to me better than investopedia.

I understand that a Option is a contract to buy or sell an asset by a specified date at a specified price however I don’t understand where the insane exponential gains/losses come from. Somebody please spoon feed me in retard terms... thank you

[Anonymous No.26037171]

>>26036333
Start by selling call options on TSLA. Guy gambles on Tesla stock going up 20% because of daddy Elon tweeting some shit, you call his stupid bet and sell him the options, pocket yourself a fat premium. It's the best way to gain money from options trading.
Another option you should consider is buying SPY puts.

[Anonymous No.26037305]

The time constraints of options bets stress me out. I have gotten good with the crypto shit but I like that it bails you out if a bad trade if you are patient. Now that I have decent cash I've started diversifying I to individual stocks that I like which have good yield potentials (fuck boomer 10% shits). Not as much of a rush as crypto but it gives me something to read about on the toilet besides shitcoins.

[Anonymous No.26037361]

>>26037171
Can you explain this screen of SPX calls and puts I have here?
Why are the puts that or on the money line not at 100?

Also why arent they exactly linear, i.e. put at 3705 worth 77.5, put at 3710 worth 64.35.

[Anonymous No.26037560]

>>26037171

Ok but how are people making 1000% on a options trade...

I understand the concept of collecting premiums...

[Anonymous No.26037741]

>>26037171
>>26037361
What do you buy here if you think Tesla is going down?
How do you decide the timeframe?
If you think it will go to 450 should you buy a put with strike price 450 or short a call, which call?
What if you just buy a put at 600 what happens with that put if it goes to 450?

[Anonymous No.26037805]

>>26037560
Because one single options contract refers to 100 shares, thus by owning ONE contract you basically feel the effect of the price movement on 100 shares... In the screenshots you see, people buy hundreds or even thousands of contracts...

If you own 100 SPY $400C and SPY goes to 410, you get the same profit as if you bought 10000 SPY at 400 and sold at 410... but you don't actually buy 10000SPY (because you're a poorfag).

[Anonymous No.26038005]

>>26036333
>calling self degenerate
>gain/loss porn
>retarded geniuses
gbtr faggot

[Anonymous No.26038016]

>>26037741
A 600 put means you can SELL 100 shares of the underlying stock at the mentioned price (600) before the expiration date.

If the stock price goes to 450, it means you can buy the shares at 450 and sell them for 600 (you can do that because you own the put).

Als je Belg bent = cringe, Nederlander = gebaseerd.

[Anonymous No.26038129]

>>26038005

hey fren, this isn’t r/gatekeeping

[Anonymous No.26038211]

go to wallstreetbets they're better for normie options trading. don't even bother though OP, crypto is going to boom in the upcoming years and normie money will flow from stocks to crypto, plus you don't have the thousands of autistic hours you have put into crypto.

[Anonymous No.26038215]

Aaah thanks frens, I’ve been thinking for a couple of months now about that shit. What you want is the highest confidence of any move, not a prediction of some move.
I understand why I’m torturing my psychology with this shithole.

[Anonymous No.26038217]

>>26037805

Gotcha, so it doesn’t matter what broker you’re using, an option contract is always 100 shares?

What is the downside if you lose, you just have to pay the premiums?

[Anonymous No.26038414]

>>26038215
Well, yeah, there are many options strategies to pretty much profit from all possible movements... as long as you can predict the crab/pump/dump and put in the right orders, you're good.

>>26038217
If you BUY a put and it doesn't go below the strike price, it expires worthless.

If you sell a put and it doesn't go below the strike price, then you just keep the premium. However, if it does, you will have to buy 100 shares at whatever the strike price is, no matter how low it goes... so for example if your strike price is 600 and the stock moves to 100... you've basically instantly lost 50000 (500 * 100 shares in a contract) per contract.

[Anonymous No.26038504]

OP if you're serious read Options as a Strategic Investment, a book about Black-Scholes, and Security Analysis by Benjamin Graham. I'd also recommend reading The Incerto but it's not strictly necessary.

If you're not serious don't fuck around with options. Stick to buying, selling, and shorting.

[Anonymous No.26038664]

>>26038016
And 1 put of 600 costs $21.75 or $2175?
So for a $2175 investment I would make 15000 if this scenario turns out? Or a 6.9x?

And 1 put of 700 cost $4925 so this would then make $25000 @450 and thus 5.1x?

Why should you sell call options instead?

[Anonymous No.26038918]

>>26038414
Certified retard, you are confusing put with call in your second paragraph

[Anonymous No.26039082]

>>26037560
buy way far otm options on tech companies. Buy at .05 and sel a month later at 5 bucks. basically free money. been doing it with apple since march

[Anonymous No.26039134]

>>26038664
Well, you always have to do the price you see * 100 which means 2,1 or 4,9k.

If you have a 700 put and the price goes to 450, you will make AT LEAST 25k. 25k is the minimum profit you can make and it implies you close your position right on the expiration date.

Prior to the expiration date, your price will be higher because you will still have a time component (you have X days left until the expiration date... which means that the price could go higher or lower)... time decay is an integral part of options and it absolutely reflects in the price... if you want to do more simulations you'd have to use a calculator.

By selling a call option you BELIEVE that the price won't go higher than a certain amount. Selling a call option obliges you to sell 100 shares at your strike price... Say you have a strike of 600 and the stock goes to 610... you will have to sell 100 shares of that stock for 600 (and the one owning your call will just market sell them for 610). You either have the shares in your portfolio (covered calls) or you will have to buy them at market prices (which could fuck you really bad because the upside of a stock is unlimited).

[Anonymous No.26039492]

>>26038918
How?

>Selling a put: You have an obligation to buy the security at a predetermined price from the option buyer if they exercise the option.

The only way you don't lose money is if the put is at or above your strike price on the expiration date. Should you hypothetically get assigned on it, you'd literally have to buy stock BELOW market price (which you could instantly sell at market price).

[Anonymous No.26039574]

>>26039492
>the put
the price of the underlying asset*

[Anonymous No.26039617]

>>26036333
Options are how you see those news reports with headlines like "22 year old commits suicide over $750k margin call". The thing is losses are absolutely gigantic on bad options plays and the reason the fucktards on /smg/ have been relatively safe from this (asides from the GME naked calls holder) is because we're in an unprecedented bullrun.

[Anonymous No.26039705]

>>26039082
what expiration times do you buy?

[Anonymous No.26039829]

>>26036333
You didn't "wrap your head around crypto markets". You just bought crypto. Thats all. You don't understand it but it went up. Good for you, but don't tell yourself you figured anything out. This is good advice.

[Anonymous No.26039949]

well at the current prices and market volatility i would say puts are a better alternative with less risk compared to shorting

OP do know for starters there are two ways of dealing with option
you can buy options in which case your potential loss is limited to whatever you pay to open the contract
or you can write options and your potential loss in unlimited, don't do the second kind
also here
https://www.optionsprofitcalculator.com/
so you don't have to tire yourself with calculating it all yourself

[Anonymous No.26040064]

>>26038504
Interesting, I will look into those book recommendations.

[Anonymous No.26040312]

>>26039617
not necessarily... just don't do stuff you can't handle. You can always do covered puts/calls or other options strategies preventing you from shit like that.

>>26039949
>you can write options and your potential loss in unlimited
only for call options, and only if you are doing just writing naked calls.