3 ms·

No... I wouldn't consider $500 in capital losses an "equally insane amount"...

• manmal 7y ago
  I thought that you can only have such high leverage if you bought super meta products that expose risk, meaning you borrow money for that bet and which you‘d have to pay back if the hoped-for increase doesn’t come.
  • tempsy 7y ago
    not with buying options - your max loss is just what you buy it for.
    • zaroth 7y ago
      For example the $500 call options on TSLA which expire on Friday. They were on-sale all month, giving you the option to buy a share of TSLA at $500 up until this Friday. Today they were selling for ~$85/share. But on Jan 1 they were selling for ~$5/share, and tomorrow morning it looks like they will be worth maybe $150/share. 30x in a month for a True Believer -- sure wish I had done it! [1] - https://www.marketwatch.com/investing/stock/tsla/option/TSLA%23A3120C600000 https://www.marketwatch.com/investing/stock/tsla/option/TSLA...
  • sf_rob 7y ago
    When buying call options the max loss is the purchase price. There's not a symmetric return as there is with owning stocks directly. The reason you can make so much with so little capital is that the probability of the stock price moving above strike price of the call option is low assuming that the strike price is much higher than the current price and the expiration date is soon
    • manmal 7y ago
      Ah, thanks for the explanation!