4 ms·
You can avoid the borrowing fee and margin call risk by purchasing PUT options. The $320 PUT expiring in 1 year costs $240. I purchased 2 contracts on Wedne
by fairity 6y ago
You can avoid the borrowing fee and margin call risk by purchasing PUT options. The $320 PUT expiring in 1 year costs $240. I purchased 2 contracts on Wednesday bc I don't see a scenario where the price doesn't crash back down below $60 within a year. Expected ROI of 10-20%. Not a large return, but also a pretty safe bet imo considering their ATH prior to this squeeze was $60, and that was back in 2007.
- takklz 6y agoThe put options im seeing for 1 year out at $320 currently cost $24,000. (1 contract at 100 shares) what are you looking at that I am not? Am I looking at the wrong thing? Edit: (sorry I’m not an expert in options)
- deleted 6y ago[deleted]
- galimaufry 6y agoOptions prices are usually quoted per share even though you buy them in increments of 100 shares. So GP paid $25,000 per contract.
- fairity 6y agoSounds like you're looking at the right contract. Option contracts are written to give the buyer the right to buy/sell 100 shares. So, the minimum investment for the $320 PUT is ~$24K. Contracts with lower exercise prices will be less expensive, but carry more downside risk.
- shmoogy 6y agoWon't IV collapse from the ludicrous 800% killing any gains? Better to sell cash secured put to gain the premium then sell the underlying maybe?
- fairity 6y agoNo idea how time value will trend, but I’m comfortable holding these contracts til expiration at which point I think the price will be sub 60. Could definitely be wrong - I just don’t see how! Investing isn’t my profession.