4 ms·

This seems like post-hoc confirmation of "I knew it! I told you guys so!" like people who claim a catastrophic recession is around the corner, quarter after ne

This seems like post-hoc confirmation of "I knew it! I told you guys so!" like people who claim a catastrophic recession is around the corner, quarter after next. If you have some special insight that the wider market doesn't and hasn't price in, then the odds and prices are asymmetrically tipped in your favor. As an example, I spent $13,580 shorting Facebook on Wednesday, which I haven't sold but will probably later today. Yesterday, those short contracts were worth north of $200k. I did it within a Roth IRA, too, which makes it even higher conviction. Truth is, it was a gamble. No one really knows. If you can truly predict where Facebook will be in 5 years, 2 years, even next quarter, you can be really rich.

chillage 5y ago
That seems a pretty smart short (in retrospect). I guess you were banking on them releasing concrete numbers on the iOS changes and people panicking from it? Seems really obvious in retrospect and relies on pretty common knowledge so I'm surprised that worked so straightforward. Good job.
- alephnan 5y ago
  I've noticed they stopped showing ads from actual businesses. Instead, it was sponsored posts from individuals self-promoting for purely vain reasons as opposed to some commercial reason.
hnburnsy 5y ago
I thought you could not short stocks in an Ira, only sell covered calls? Is there some way around this rule? https://www.investopedia.com/articles/personal-finance/103114/roth-iras-investing-and-trading-dos-and-donts.asp https://www.investopedia.com/articles/personal-finance/10311...
- gruez 5y ago
  options, maybe?
  - jliptzin 5y ago
    Yea sounds like put options, an outright short wouldn’t have gained that much %
- alephnan 5y ago
  You can do Level 2 options trading in a IRA. So you can sell covered puts / calls, or buy puts /calls. Those do not require margin. You cannot sell uncovered calls / puts, which would require margin. Part of my position was buying $280 weekly puts which were $1.39 each, now $49.5 each ( still haven't sold lol).
  - hnburnsy 5y ago
    thx!
dom96 5y ago
On a more general note, anyone know of any good guides/articles describing these sorts of bets? I often have a sense of where a stock price will go but have no idea how to take advantage.
- jboy55 5y ago
  Just note, the poster most probably did not actually 'short' facebook, the poster used options to do this. Its pretty simple for the buy case. Options have a strike price and an expiration date. You buy a CALL option, with a strike price, that gives you an option to buy that stock for that price. Or you can buy a PUT option, that gives you the option to sell at that strike price. Example using made up numbers. FB is $240. You look on the options tab and you can see various expiration dates. Lets pick 3 months out. You may see a Call option for a strike of $250 for $20. That means that you have until 3/4/2022 to exercise that option, if FB is trading for > $260, you will make a profit. ($240 + $20). If FB doesn't trade you make nothing. Puts work similarly. The strike would just be $230. Note, you don't have to exercise, if next week FB goes to $300, your call's value will skyrocket to ~$60-70. You can sell the option any time, you don't have to wait. You may have noticed the cost of the option is greater than the delta between the exercise price and the value of the share. In my example this is roughly due to the time between now and the exercise date. Over time, this shrinks, this is called beta-decay.
  - npongratz 5y ago
    > In my example this is roughly due to the time between now and the exercise date. Over time, this shrinks, this is called beta-decay. I think you mean theta decay. Theta is the time factor of an option's value. Beta is, roughly, a comparison of a security's (or portfolio's) volatility versus market vol. https://www.investopedia.com/terms/b/beta.asp https://www.investopedia.com/terms/b/beta.asp Beta decay is studied in a completely different industry. https://en.wikipedia.org/wiki/Beta_decay https://en.wikipedia.org/wiki/Beta_decay
    - jboy55 5y ago
      Thanks, it was theta, I had it explained to me first as beta, and it stuck in my mind that way.
dxbydt 5y ago
Incredibly good bet!!! Congrats all around. I made the opposite bet (whoops!) but on a much smaller scale. A tiny 300-270 put spread that lasted 2 days. Then, right before the earning, exactly 7 minutes before 4pm, I kid you not, I had a premonition. Something in my head said "Get out get out get out". So I closed out my spread, pocketed my measly gain of $775 and walked out the door to pick up my kid from school. So I'm back home at 4:30pm, I just login to ib for curiosity sake, just to see what would have happened if I had stuck to my guns. Jesus Mary & Joseph I was so shell shocked...would have lost well over 50K if I hadn't pulled the trigger !!! I was so glad I danced a jig & took my kid out for icecream. He wanted to know why, but explaining all this shit...$775 profit over 2 days for pushing a couple of buy & sell buttons & narrowly avoiding a major, major $50,000 loss. Definite icecream day. I just said Daddy is happy lets buy icecream.

chillage 5y ago

That seems a pretty smart short (in retrospect). I guess you were banking on them releasing concrete numbers on the iOS changes and people panicking from it? Seems really obvious in retrospect and relies on pretty common knowledge so I'm surprised that worked so straightforward. Good job.

alephnan 5y ago
I've noticed they stopped showing ads from actual businesses. Instead, it was sponsored posts from individuals self-promoting for purely vain reasons as opposed to some commercial reason.

hnburnsy 5y ago

I thought you could not short stocks in an Ira, only sell covered calls? Is there some way around this rule? https://www.investopedia.com/articles/personal-finance/103114/roth-iras-investing-and-trading-dos-and-donts.asp https://www.investopedia.com/articles/personal-finance/10311...

gruez 5y ago
options, maybe?
- jliptzin 5y ago
  Yea sounds like put options, an outright short wouldn’t have gained that much %
alephnan 5y ago
You can do Level 2 options trading in a IRA. So you can sell covered puts / calls, or buy puts /calls. Those do not require margin. You cannot sell uncovered calls / puts, which would require margin. Part of my position was buying $280 weekly puts which were $1.39 each, now $49.5 each ( still haven't sold lol).
- hnburnsy 5y ago
  thx!

dom96 5y ago

On a more general note, anyone know of any good guides/articles describing these sorts of bets? I often have a sense of where a stock price will go but have no idea how to take advantage.

jboy55 5y ago
Just note, the poster most probably did not actually 'short' facebook, the poster used options to do this. Its pretty simple for the buy case. Options have a strike price and an expiration date. You buy a CALL option, with a strike price, that gives you an option to buy that stock for that price. Or you can buy a PUT option, that gives you the option to sell at that strike price. Example using made up numbers. FB is $240. You look on the options tab and you can see various expiration dates. Lets pick 3 months out. You may see a Call option for a strike of $250 for $20. That means that you have until 3/4/2022 to exercise that option, if FB is trading for > $260, you will make a profit. ($240 + $20). If FB doesn't trade you make nothing. Puts work similarly. The strike would just be $230. Note, you don't have to exercise, if next week FB goes to $300, your call's value will skyrocket to ~$60-70. You can sell the option any time, you don't have to wait. You may have noticed the cost of the option is greater than the delta between the exercise price and the value of the share. In my example this is roughly due to the time between now and the exercise date. Over time, this shrinks, this is called beta-decay.
- npongratz 5y ago
  > In my example this is roughly due to the time between now and the exercise date. Over time, this shrinks, this is called beta-decay. I think you mean theta decay. Theta is the time factor of an option's value. Beta is, roughly, a comparison of a security's (or portfolio's) volatility versus market vol. https://www.investopedia.com/terms/b/beta.asp https://www.investopedia.com/terms/b/beta.asp Beta decay is studied in a completely different industry. https://en.wikipedia.org/wiki/Beta_decay https://en.wikipedia.org/wiki/Beta_decay
  - jboy55 5y ago
    Thanks, it was theta, I had it explained to me first as beta, and it stuck in my mind that way.

dxbydt 5y ago

Incredibly good bet!!! Congrats all around. I made the opposite bet (whoops!) but on a much smaller scale. A tiny 300-270 put spread that lasted 2 days. Then, right before the earning, exactly 7 minutes before 4pm, I kid you not, I had a premonition. Something in my head said "Get out get out get out". So I closed out my spread, pocketed my measly gain of $775 and walked out the door to pick up my kid from school. So I'm back home at 4:30pm, I just login to ib for curiosity sake, just to see what would have happened if I had stuck to my guns. Jesus Mary & Joseph I was so shell shocked...would have lost well over 50K if I hadn't pulled the trigger !!! I was so glad I danced a jig & took my kid out for icecream. He wanted to know why, but explaining all this shit...$775 profit over 2 days for pushing a couple of buy & sell buttons & narrowly avoiding a major, major $50,000 loss. Definite icecream day. I just said Daddy is happy lets buy icecream.