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80% of my portfolio is now in long-term PUTS against GME (like short-selling, but without the risk of margin calls if the price rises.) People want to treat it
by eloff 6y ago
80% of my portfolio is now in long-term PUTS against GME (like short-selling, but without the risk of margin calls if the price rises.) People want to treat it like a casino, fine. But that won't last.
When it goes back down I'm going to make a nice profit out of this craziness.
Or you know, lose a lot if it somehow stays insane for an entire year.
I know what my money's on.
- ganeshkrishnan 6y agodepends on when your puts expire. Everyday you are losing money due to time premium. markets like this can stay irrational longer than you can stay solvent.
- eloff 6y agoThey're long-term puts. Options generally don't lose much that value in time premium until about 90 days before expiry and then it accelerates quite rapidly.
- mizzack 6y agoWait til you find out about IV crush
- eloff 6y agoThanks for that, I'll sleep better now.
- filoleg 6y ago^This. It isn't all just about the stock price and expiration date/strike price. Case in point: had friends who bought GME puts 2 days ago. GME stock went significantly up in price since then, and so did my friends' puts. Why did their puts go up in price if the stock price went up? Because IV increased, which pumped the price of options across the board, both puts and calls. When IV crush occurs, the exact opposite happens.
- roland35 6y agoI tried this in my "fake money" portfolio on investopedia and so far have lost $20k fake dollars doing the exact same thing! Turns out these puts are expensive and they keep losing value as the price stays high (bought 4/19 $80 puts)
- eloff 6y agoAll I can say is it feels worse when it's real $.
- hntrader 6y ago80 percent of your entire portfolio is a lot for that. Note also that option buying is negative expectation on average due to the premium demanded by sellers.
- eloff 6y agoMost of my wealth is not in stocks, so it's not as bad as it sounds.
- spacedome 6y agoWhat kind of premiums did you pay on those puts though? Last I looked the prices were pretty insane.
- eloff 6y agoYes, it's very high. I worry that I can lose money even if my bet is correct, if the volatility goes down and thus the premiums also go down.
- spacedome 6y agoLooking right now some of the options a few months out have implied volitility of 1000%+, your best bet might be selling them off on big crashes instead of waiting it out? Some of the puts I looked at went up 500%+ after this dip
- eloff 6y agoYeah, that occurred to me. At least sell off enough that I don't mind letting the rest ride.
- throwitawayfam 6y agoI'm guessing your puts will be ITM but you'll get raked over the coals with volatility going way way way down. Good luck
- Kranar 6y agoI'm not in a position to give you specifically financial advice, but there's no easy money to be made in GME, the entire thing is incredibly risky. The LEAPS for GME in the 10-50 dollar strike price range are all pricing in premiums of 30-50%, meaning the price of GME needs to go below half the strike price before it pays out. In other words, best case scenario is GME drops from 300 dollars to 10 bucks and then you make 100% on your money. That's not really a nice profit for the risk you're taking.
- spacedome 6y agoYou can make big money trading the volitility, if you get really lucky. The price of some puts I looked at went up 500%+ during the drop today. Would not try this personally lol
- Kranar 6y agoShort term puts yes, long term puts no. For short term puts you pay (or are rewarded) in volatility, for long term puts you pay (or are rewarded) in premium. At any rate, my point isn't you can't make money off this, it's that there's no easy arbitrage opportunity happening on GME. It's basically trading like a volatile stock would trade, and it's being priced as such. Whatever free or easy money you think there is to be made on GME is likely just a coin toss.
- spacedome 6y agoI meant doing day trades of long term puts, but yes I agree any money here is a huge gamble.
- eloff 6y agoYeah, this has sort of dawned on me a few days after I made the trade. I don't think I'd take that risk on again if I had the option.
- viklove 6y ago> People want to treat it like a casino, fine. Like you? I already liquidated 30% of my position and got my initial investment back. Now I'm playing with house money. I gotta say, it's a lot more fun being on this side (with the memes and the fun mottos), than being on the side you're on!