5 ms·
Let's be clear: he didn't even buy stock, he bought CALL OPTIONS. If he put $400K into Alibaba stock, he might still have $150K or $200K, depending on when he
by cl42 5y ago
Let's be clear: he didn't even buy stock, he bought CALL OPTIONS.
If he put $400K into Alibaba stock, he might still have $150K or $200K, depending on when he did it.
He put all his life savings on what he considered a 'safe' investment in call options with a specific expiry date.
I love investing and taking big risks, but this is idiotic. His description of what call options are ("a leveraged bet on an underlying stock, which helps you increase the upside (or downside) of the bet you're trying to make") is simplistic at best.
- mikestew 5y agoI think his description of what a call option is missed the "...and over 50% of them expire worthless" part. I trade options a fair amount and have done so for many years, and I make good money doing it, but I don't have the balls to go all-in on a contract that stands a 50/50 chance of going poof come expiration day. I don't think anyone that has working knowledge of what they're doing with options has that kind of testicular fortitude, at least not without feeding a gambling problem. Options are supposed to be a hedge, by my understanding (even though I personally don't use them that way); but call them what you like, just don't call them a "safe bet" no matter the underlying stock.