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Shit. You wrote a naked call on GME today? That’s insane. Even if you think you know what your doing. This is the steam roller. And you’re the guy picking up th

Shit. You wrote a naked call on GME today? That’s insane. Even if you think you know what your doing. This is the steam roller. And you’re the guy picking up the penny in front of it. But, the premiums can be pretty juicy. Looking at the 29Jan 320 Call options, if you were good, and called today’s top. Then you could’ve wrote the call at 145. Then held it for 90 mins, when it bottomed out at 89. Netting you a cool $56 per contract. If you wrote 1 contract on this play, then 56 x 1 x 100 = $5600. So, $5600 of net profit in 90 minutes. If you’re lucky. It’s best to have a large war chest to play this strategy. But, if you’re unlucky, then a short squeeze can even happen during normal trading hours, and it would probably wipe you out. You can call the wrong top, and the spreads are so wide, that the loss is heavier to exit the position. And if you ran this strategy yesterday, at a lower price point, and held it overnight, then you would’ve been wiped out this morning, when the stock spiked in overnight off-market trading. So it’s best to keep this strategy to a daytrade. I don’t recommend this strategy to anyone. The odds of you consistently calling the top, correctly, all the time, is very low. And the crazy phenomenon going on right now, is that the retail traders, are somewhat collectively operating like a hive mind. Whether they can really succeed to achieve their objective of hitting $1000/share, remains to be seen. But, I’m not going to challenge this one, at this time.

silexia 6y ago
You are probably right. It would suck if the stock went to $1,000 and the buyer of my call option exercised at that point. That would be a loss of $68,000. On the other hand, if I am right that this is about the peak, then I get $20,000. I could either close my position, or I could potentially buy the same call option strike with a shorter expiration for cheaper... Most likely the run up on GME will be over by then. If not, I could just buy another call option with a further strike on top of it. Perhaps my strategy should be selling call options dated for 79 days from now with a strike of 320 for $190... Then buy call options for when I think this thing will end... Say 9 days out with the same strike for $152. If things go crazy high, then I can use my buy call option to cover the sell call option. If it doesn't, then my profit is $192-152 = $40. My theory is the stock has run insanely high, and even Elon Musk has made comments that are priced in. At this point, WSB users may have all their money they want in this play invested... Who else comes in to sustain the current price or drive it higher? What if GME execs decide to sell some shares to raise funds? Or if the SEC asks them to to stop the short squeeze? The stock almost reached the WSB pie in the sky goal of $1000... How many people are going to make sure they aren't the last fool in the stock holding the bag? But if I am really wrong, and the stock went to $5000 on a short squeeze, that would hurt. $5000-320= 4,680 x 100= $468,000. I probably should buy a shorter run buy side call option to cover my risk. $20,000 with high probability outcome vs $468,000 with a low probability outcome... Who exactly sells call options anyways? Someone has to be selling these naked in order to provide the volume that is out there, right? Probably people doing it behind an LLC shield so they can't take unlimited losses and will leave their broker ("too big to fail") holding the bag?
- blackrock 6y ago
  Well, good luck either way!
- risyachka 6y ago
  Looks like you were not right :)
- blackrock 6y ago
  Did you close your position for a profit? Or did you get margin called? GME shot up to 452, then 90 minutes later, it fell to 126.
  - silexia 6y ago
    I got scared after this thread and entered a market order to sell on the open today.
    - blackrock 6y ago
      Wise choice. That looked like a scary spike, when it shot up to 452. You might’ve gotten margin called, or worse, just have your position liquidated, and you eat the loss. But, that was today’s scary high. Then, it fell to the depths of 126, just 90 minutes later. Crazy.

silexia 6y ago

You are probably right. It would suck if the stock went to $1,000 and the buyer of my call option exercised at that point. That would be a loss of $68,000. On the other hand, if I am right that this is about the peak, then I get $20,000. I could either close my position, or I could potentially buy the same call option strike with a shorter expiration for cheaper... Most likely the run up on GME will be over by then. If not, I could just buy another call option with a further strike on top of it. Perhaps my strategy should be selling call options dated for 79 days from now with a strike of 320 for $190... Then buy call options for when I think this thing will end... Say 9 days out with the same strike for $152. If things go crazy high, then I can use my buy call option to cover the sell call option. If it doesn't, then my profit is $192-152 = $40. My theory is the stock has run insanely high, and even Elon Musk has made comments that are priced in. At this point, WSB users may have all their money they want in this play invested... Who else comes in to sustain the current price or drive it higher? What if GME execs decide to sell some shares to raise funds? Or if the SEC asks them to to stop the short squeeze? The stock almost reached the WSB pie in the sky goal of $1000... How many people are going to make sure they aren't the last fool in the stock holding the bag? But if I am really wrong, and the stock went to $5000 on a short squeeze, that would hurt. $5000-320= 4,680 x 100= $468,000. I probably should buy a shorter run buy side call option to cover my risk. $20,000 with high probability outcome vs $468,000 with a low probability outcome... Who exactly sells call options anyways? Someone has to be selling these naked in order to provide the volume that is out there, right? Probably people doing it behind an LLC shield so they can't take unlimited losses and will leave their broker ("too big to fail") holding the bag?

blackrock 6y ago
Well, good luck either way!
risyachka 6y ago
Looks like you were not right :)
blackrock 6y ago
Did you close your position for a profit? Or did you get margin called? GME shot up to 452, then 90 minutes later, it fell to 126.
- silexia 6y ago
  I got scared after this thread and entered a market order to sell on the open today.
  - blackrock 6y ago
    Wise choice. That looked like a scary spike, when it shot up to 452. You might’ve gotten margin called, or worse, just have your position liquidated, and you eat the loss. But, that was today’s scary high. Then, it fell to the depths of 126, just 90 minutes later. Crazy.