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> I bought a put last week for 2k (CMG) and now its worth 18k. You should really spell out the risk you're taking to get a return like that.
by aazaa 7y ago
> I bought a put last week for 2k (CMG) and now its worth 18k.
You should really spell out the risk you're taking to get a return like that.
- whatshisface 7y agoThe risk is that you will buy thousands of puts, week after week, waiting for a crash to happen, and when one finally does you will have spent so much on puts while waiting that overall you didn't win anything.
- deleted 7y ago[deleted]
- odms 7y agoThe total risk is 2k. So, the puts could end up worthless at the expiry date.
- voidmain0001 7y ago"Naked selling of put options can be quite dangerous in the event of a steep fall in the price of a stock. The option seller is forced to buy the stock at a certain price. However, the lowest the stock can drop to is zero, so there is a floor to the losses." https://www.investopedia.com/ask/answers/050115/what-types-options-positions-create-unlimited-liability.asp https://www.investopedia.com/ask/answers/050115/what-types-o...
- sirsar 7y agoOP is buying puts, not selling them.
- outworlder 7y ago"naked" "selling" OP is doing neither.
- sdinsn 7y agoHe's buying puts, not selling them. You think market is going down: Buy puts, sell calls You think market is going up: Sell puts, buy calls Maximum loss when buying is only your investment.
- songzme 7y agoI started doing this 3 weeks ago. Lucky me. The drop has been spectacular, as were the drops in 2008 and 2000. I only buy in after seeing spectacular drops. Again I’m not saying it’s the right strategy, I’m saying look into puts, study, observe, and maybe this works for you. Maybe not.