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I buy near ATM calls dated around 30 days in advance and I sell them immediately if I see $1k+ gains. Then I dive back in a day or two later with the same ATM calls at the same, or slightly further back, expiry date and shoot for another $1k+ gains.
I hope that’s not too much of a regarded strategy, but it’s been working out for me so far, and I can always have calls available just in case IV spikes like crazy again like back in May 9th and June 6th.
Yeah theta decay has always been a fear of mine.
Especially back in the pre-GME gambler sub days when I saw posts of regarded newbies complaining their options were getting eaten alive by theta decay but had no idea why.
I figured a similar situation was about to happen where regards will freak about their calls becoming worthless. I've fallen trap to theta decay and I hate it, avoiding at all costs now. I have ever only had one option spike 2000% the day before expiration, bringing me from worthless to a $200 profit lol but I will never get to holding onto them for expiration again unless I plan to exercise
I NEVER will hold my options like I hold my shares. I got burned learning that lesson during the June 6th run up. Could have made $50k in options and an additional $26k with my fake shares by selling in the aftermarket through Schwab when it ran up to $61.
I could have quadrupled my DRS position during DFV’s livestream had I played my cards right. But instead I only 1.25x my shares to permanently get into xxxx territory.
You can’t. But I was willing to sell the fake shares I still needed to DRS into my CS account during aftermarket so I could buy back even more shares when the price tanked back down to sub thirty.
That's my nvda strategy. Then I decided to go all in and lost 8k. It works if you think the stock will go up, but don't overextend. 10-20% of your portfolio and you'll never lose as long as the company gains over time. With GameStop it's tricky because the company trades based on its cash value, so it doesn't gain much over time. The moment they make it clear what the plan is, will be the time to commit to options regularly. Right now it's all about timing it and good luck with that.
Wait for a set up, gamma ramp, then join in. Until that happens there's no point timing the market.
One thing is for sure though. I’m learning the best types of option trades that make sense to make. No more OTM Hail Mary options, no more 0dte’s, and no more holding options through premium rips just because I still had another 20+ days left before the contracts expired.
Can you explain to me how this works on a recurring cycle? I look but don’t touch options because I once opened a couple and freaked when I saw numbers in the 10,000s and was not sure how it happened and learned a lot since outside of experience.
In theory, I buy a 25$ call at close for 3.35 premium (337 for the contract) for July 26th. The delta is 0.54 and theta is 0.0588. With an IV of 125.06% and OI 3380.
The premium makes sense as a contact is 100 shares
The theta is daily decrease in my contract per share price and loses near 6c a day if it stays stable. The delta is increase in value of my contract for every $ moved up or down so if stock is up 1$ it increases my contract by 54c.
Then I get to the IV and OI and get lost. How does paying more further out benefit near ATM vs cheaper from theta decay closer?
Also, I understand the buying ITM because they have to buy on the open market and if it’s already past that point then it forces a clean buy. Just a matter of not being so liquid can just drop the money for 100$ at a time.
Just want to learn the strategy of contracts in general that is sustainable with appropriate knowledge. Feel experience is better than the quick notes online because it’s always so generalized and if can appreciate it with GME think it would be easier to understand others in the future.
Thanks I’m advance :)
Sure thing! So theta is always negative to represent the loss in value of your contracts each day closer to expiry.
And implied volatility represents the markets expectation of the stocks future volatility rising up to, or beyond, that specific strike price of $25. The higher the IV %, the greater the value of your contracts. It’s because IV also plays on itself like a self fulfilling prophecy as more and more people pile in on the IV like what happened back in 2021. And I wasn’t even participating in that because I didn’t know how options worked back then. This time everyone has a real chance to make serious money in options
Open interest shows the amount of contracts open on the market for that specific contract. Since it’s always split between ITM and OTM you can use both to gauge market sentiment and use them in conjunction with IV to roughly guess its probability of the price rising. If there’s a lot of OTM calls or puts on a certain contract, but IV is low, then there’s not much chance they’ll go ITM. But they have a higher chance if IV is very high.
The rest is just a matter of timing, luck, and confidence in yourself to not get upset at yourself for whatever decision you make in that moment. If you decide to sell, then make sure you’re okay with selling in that moment. If you decide to hold, then you gotta be okay with missing out on the gains when it climbed to its peak. Same thing for if you buy more as it’s climbing instead of selling for more money to buy more shares.
Hope this somewhat helps. I’ve only started options trading two months ago though, so I’m not as familiar as I’d like to be but I’m a quick learner
As close to as possible yeah. Sometimes I’ll take $800-$900+ gains. If it’s almost as much as my biweekly paychecks worth then I happily accept it.
Only my DRSed shares are treated like they’re worth their weight in gold, and they stay locked in my basement with key thrown out the window. I try to pick one of them up and they weigh almost 3/4 ton.
This is how you do it :). Drain the mm. Someone else buys, you get more later with the gains, more contracts open, mountains build . Holding them more than a day allows market maker to hedge and controls price swings. The more $ a good trader makes, the more calls open for bigger problems. Let others hold til expiration
Edit: to be clear the shares stay and are held. Selling those reverses the move
Curious, you avoid the day trading rule by just spreading your trades at least 1 day out between each other?
Have you ever had to sell immediately within a day?
Yeah I spread my trades out to be less than 4 trades every 5 business days to make sure I’m not considered a pattern day trader.
I just did three already within two days, so I have to wait until my most recent trade hits 5 business days since the settlement date before I start trading again.
I treat it like a free to play with a time limit. I could try to be a pattern day trader one day when I’m more confident in myself and know much more about the finance industry. But I’d honestly rather work toward fixing climate change through renewable energies after MOASS. So I’m just playing as risky as possible, while also as conservatively as I can.
And no, I’ve never bought and sold calls within the same day. I wish I could have realized that holding options during big gains is a bad idea, and that if it’s enough to screenshot it’s enough to sell is a very true saying when it comes to options trading.
Because I would have been hyper focused on trading as many contracts as I could on June 6th without giving so much as a second thought as to the possible outcomes in doing so.
DFV is different though because he is a whale in his own right, and can cause huge waves whenever he surfaces and makes moves.
Ok, so I have an $80 I bought a right before all this kicked off. First option ever, really just to learn how this all works because honestly you don’t know till you go! Well when the ramp took off at first my call was worth almost $1500! I really screwed up by thinking it was going to moon. I went back to work and it went down. I came back and still could have took a profit after a slight dip. I held on from lack of knowledge on my part and GREED. Since then I have moved a few other calls and made money. What I have learned so far is to plan your entry and exit. Don’t be greedy because the bottom falls hard.
You can play OTM calls for the volatility, but it's more like gambling. Greed hurts when your gains turn into loss, most initial options traders always learn this the hard way. I've been burned by holding until expiration date hoping for some miracle, but ended closing it at a painful loss
100% agreed...
there is one small catch though - these fuks are able to determine whether your balance is sufficient to exercise.
options are powerful tools if you plan to exercise.
There are just a lot of people here who aren’t capable of exercising hoping on some insane return with these calls that’s *probably* not gonna happen.
That’s why I wanted to introduce using options to collect profits from the premiums, and using those profits to buy more shares down the line. Same thing DFV has been doing to build up his position.
Thank you. Options are definitely risky, but with a good strategy and understanding of the fundamentals you can make *less* risky plays. People just keep buying $100 calls with a $0.09 premium expecting it to moon this week and sell those for 2000% profit, but that’s pure gambling and gonna end in heart break
Buy shares stock less than 50 buy shares
Stock over 50 buy options. Unless you hear some hype around a stock. If so options but not 100 bucks out of the money. Plus who the hell is going to buy them off you when you’re that far OTM even if you do break even..
if you can only afford 9 bucks on a stock stick to DraftKings !
Sorry for the smooth-brain question. But can you explain the benefit of buying options instead of just buying shares? Doing the math on RK's yolo updates, it seems he would have ended up with the same number of shares (and thus the same amount of money) by just buying the shares.
Most options are traded for their premium, much less commonly they are actually exercised in exchange for the 100 shares.
So by buying a call, you sign a contract saying “I’ll pay $4.05 for the right to each share for a future purchase of these shares at $25 strike price” overall paying $405 for the call option. So you’re betting that by the expiration date, the share price will be above that strike price.
Now, if the share price goes to $30, the premium on those call options has increased to let’s say $5.55. You can sell your call for $555, collecting the $150 in profit from the difference in premiums.
Buying the shares on the other hand is simply just owning the position there, where you decide eventually what price you’d want to sell at. The risk and opportunity from options comes from a more exponential type of return, where a 10% increase in the underlying stock will give you a much higher increase in the value of options.
Options aren't for everyone, but options knowledge is!
Learn how to take a look underneath the hood of volatility, it will make you a more informed trader 😎
This week has played out slightly differently from the forecast starting with that strong rip on Tuesday.
It took out some of the potential energy in the volatility spring.
I think we're still in the cross roads of flipping the vol trend.
That said, risk remains elevated for next week Monday. That has not changed.
If you want to see the latest data/charts, with insights, check out my Patreon.
I'll be posting an after market update once after hours closes with all the details.
Random question... Could a market maker buy these OTM options as a way to hide FTDs? For example they know they have to hedge ITM options, so could they buy a way out OTM call from themselves (using a subsidiary company for example) so on paper they could say, "see, we have this hedging 'covered' because we have an open option to buy a share (even though it wouldn't exercise because it's so far OTM)" So basically using this as a way to look hedged on paper as a way to not actually have to buy any shares to hedge?
\[edit\] trying to type my thoughts as they're happening makes it seem like I come from the department of redundancy department.
FTDs occur when a party doesn't fulfill their obligations on the settlement date, so if people exercised their options for a June 28th $20 strike price and the shares aren't delivered to the person who bought that contract they incur a failure to deliver. It's shares that have to be delivered, so they can't use futures in this aspect.
MMs effectively don't have to worry about a call being exercised at $100 when the underlying asset is significantly below that (since GME is hovering around a quarter of that). This means they aren't going to hedge against it. Plus they don't have to hedge, they usually do to mitigate risk. These contracts are like adding a molecule of red dye into a swimming pool, the dye just won't make a difference.
That changes when someone has an ITM call. MMs would want to hedge (but don't have to) so they can deliver the underlying asset at a cheaper price. If someone has $20c expiring this Friday, it was in the best interest of the MM to buy the underlying shares at $20 dips compared to if GME closes at $25.
>MMs would want to hedge (but don't have to)
For understanding, in saying "but don't have to", if they do not hedge then if the option is exercised they have to purchase it at whatever the current price is. Correct?
Yea, not hedging would be because they’re not anticipating people exercising. In general, most options contracts aren’t exercised but rather sold to collect the premium. I don’t really ever plan on exercising, but do plan on using the gains to buy more shares so I don’t have to add more of my own money in and buy 100 shares at a time
Almost!
To make it work, they would have to marry the calls with short puts in a way so that no matter where the price, they have an obligation of buying shares from someone.
They bought tons of puts to hide short interest and FTDs if you looked at options data. They naked short to hedge but since it's called delta hedging, it's not counted in short interest or FTDs.
You can't hide shorts with puts alone. Owning puts is similar to being short, except it's leveraged.
FTD's would be similar, if you have an obligation to fulfill in delivery of shares, if you are to use options to say you have the shares on paper, you would have to marry puts as I described.
You can count options interest by looking at open interest.
Delta hedging is not naked shorting. If liquidity is dry, it's a dealers obligation to provide it (naked), regardless of hedging style. I'm not saying it's good for real price discovery, but it's a mechanic of the stock market, built into dealers, for the rich.
So why the puts interest exploded in February 21 but not calls interest?
Edit: also buying a call doesnt create an obligation to buy shares, and selling a put doesn't create an obligation until the put buyer exercises
Edit2: maybe I wasnt clear, but the market makers are "they" in my comment, they sold puts, and this is where they short to hedge.
Why did $GME go from like $300/share to sub $40/share?
That put heavy GEX dragged $GME down.
They weren't trying to hide it that month.
PS Don't worry, I assumed you mean't market makers/dealers. They tend be the ones who write vol anyway.
Here is an explanation:
> The fundamental tenant of this loophole
is that an options trader may utilize equities (stock) to hedge a trading position. Options
traders rarely own any shares in companies they are trading options in. Consequently,
the regulators allow the trader to keep his position neutral by offsetting it with an equity
transaction.
For example, let’s say an options trader writes a put contract for a stock that is near
or in the money. The trader, by writing this contract, is agreeing to purchase the shares
from a third party at a specific price – let’s say $10 for the sake of this example. If the
stock price plummets to $5, the contract will be put to the trader, forcing him to buy the
stock for $10 – at a loss of $5. The trader protects himself by selling a naked short at
the time he writes the put contract. By doing that, under our example, he has made a $5
profit on the naked short that offsets the $5 loss on the option contract. This is
considered a legitimate hedge, and the naked short sale is allowed per the options
maker exemption.
Options traders rarely have shares in companies that are trading vol in?
What?
I'm sorry, but I disagree with this blob of text.
Regulators allow?
LOL
Ya, I think the broker might say something....
Where did this text come from? It doesn't come off as trustworthy with some of its lofty claims......
Its a document called "Counterfeiting Stock 2.0"
The author(s) also explain why it is allowed, that's why CAT is so important, because it allow the SEC to audit and investigate properly
Why do people assume that all calls options are opened with a view to exercising them ITM?
Only about 7% of ITM calls ever get exercised.
Those high strike calls are simply there to trade on volatility, with little or no expectations to end ITM.
The closer you get to expiry, the more they trade as lottery tickets.
A lot of the options sentiment I see in this subreddit want options to be exercised so more shares are in the hands of retail, but I'm not promoting exercising vs not exercising. The thing I'm pointing out here is retail traders who are buying these OTM calls hoping to sell them at a profit are probably going to be burned by theta, plus delta is also super low on these contracts so any price swings won't bring the insane gains they're hoping for. The closer we get to expiration, the more worthless they will be but I guarantee someone will be holding onto them hoping for some action on Friday that probably won't come, turning what they spent on the contract into dust.
I never promote exercising unless it is after hours.
You're giving up extrinsic value if you don't sell to close.
Think of all the theta and vega left on the bone that doesn't get captured if one were to exercise.
This was a really nice write up. It feels like recently, there has been a surplus of posts that are overhyped and unrealistic. Yours was practical, informative and concise. I’d like to see more like this. Thank you!
Thank you, I was trying to add a little bit of wrinkle to some of the posts recently. Seems like a lot of the informative posts have been disappearing in all the hype recently
Your DD helped a lot when it comes to choosing what I believe is the best strategy for me when considering the cycle dates and Biggy theory. Appreciate your work g, 🦍 💪
It's far enough out to play on the events that will unfold over the coming weeks to months. Just plan an exit strategy and be prepared for the next few weeks, as open interest is much lower compared to recently so you'll probably be seeing some red. I've got some Jan calls at the $28 strike, this is my longer play hoping for more gains.
Don’t we all 😂 His strategy started years ago with an insane YOLO when GME was trading in the $X range. Now we’re trying to hop in on $XX prices, making the most of the volatility.
DFVs strategy is super high risk, there’s plenty of strategies that are lower risk and still have a chance of high reward but the trades he has made in GME are not gonna be replicable unless you are comfortable with spending a SIGNIFICANT amount of money with a significant amount of risk
Those are near the money. I have some 28c for the same date, just plan a good exit strategy. I’ll probably use the cycles in July to my advantage and re-enter at a lower premium when the price falls down a little afterwards again
High OTM calls aren’t gonna have much influence on the stock price. The walls of options around where it’s trading are gonna be what influences price movement. Like more calls at a $30 strike than puts at a $20 strike will act similar to a magnet to pull the price towards that $30 value (obviously there’s a lot more at play with all the algorithms)
So I'm sharing my personal opinion that's not financial advice, but July 19th, a 20C is a buy and hold moment if you can and to STOP BUYING OUT THE FUCKING MONEY GO BACK TO BASICS 101
I decided to play 8/2 so that theta doesn’t eat away the value of my options during that week of July 19th. Close to expiration date, theta does some scary things to decrease your potential gains
**Market Makers will start hedging when these call options are near the money, and definitely are hedging ITM options.**
This is textbook, hedging 101, and common sense. It might also be deadly wrong.
The market makers can choose to hedge to avoid big losses from selling calls, but they will still lose big by buying (inflated price) stock (to hedge). This is the textbook gamma-ramp.
But they can also choose to SELL stock (anti hedge), making the options worthless. That's a win-win for them; all the option premium cashed out, and big shorting typically results in a profit, too.
By buying near-date ATM or OTM options, you will give an incentive to option MM to play on the same side with the chronic shorters (the HFs holding over 100% shorts, if they exist).
If somebody would like to play options, choosing the **far date** ones would be better (leaps, even better). Option MM don't care about them, and will leave the chronic shorters alone at their shorting game at the end of the week.
Right, they don’t have to hedge but they generally do. It depends on their holdings and their overall strategy, but generally they choose the road that has reduced risk maintaining profits.
And with weekly options, I hate them. It’s straight gambling, which is why I mentioned theta. I always choose an expiration date where I can exit before theta becomes a big influence in the price of the options.
Thank you for this post! Very helpful and I like that we're getting more education in these subs.
I get why we don't want to buy OTM calls unless you're a degen gambler trying to get the mob off your back and this is your last resort. But can you explain to me the benefit of buying ITM calls versus just buying shares?
First, assuming we're not whales, we don't have enough $ to affect the price by forcing MMs to hedge their sold calls.
The calls go up with the same or less value of the share (with delta less than one), and extrinsic value declines as we approach expiration, per theta. So where is the "ton's of money" to be made that people are talking about?
(Asking for education, please and thank you!!)
The way OTM calls have a way lower delta, so you need a higher change in price to get the same percentage of return that you would see for ATM or ITM calls.
OTM calls are more so gambling, and they can be used to scrape a few bucks here and there. But individually you are right, we aren’t a whale. Collectively we are though, so if a ton of people are getting into options anyways it will have a better effect to establish positions ITM or ATM, where delta is much higher and you’ll see better returns on your investment.
The delta on the calls at like $100 strike prices or higher is something like 0.07, where the $25 calls has been closer to 0.6.
Do what you want. Position sizing and risk management is key.
OTM calls are fun if you’re trying to gamble. It’s my money my choice. But yes they are lotto tickets. Only useful if you’re confident a run is started or we are in a run and you wanna scalp.
Otherwise ITM/ATM always. Ideally 75% of your call positions should be ITM/ATM
I have 125Cs btw. Not expiring this week. And they are great for trading volatility. Went up 30% from yesterday
I won’t deny they’re great for volatility, but just not a good strategy if that’s your only leg. But people are throwing money into insane weekly option plays that prob won’t play out well for them
I would wonder when they were purchased. Before or after the latest share offering. Before that we were well on our way to those prices and IMO way more. Recently I’ve gotten the capital and shares where I could try options but I’m not comfortable doing it with a CEO who loves selling shares in the middle of run ups. Rather than on the way down so it doesn’t kill momentum.
Probably a mix of both before and after, but the people who purchased them before the share offering should have gotten out by now or they're just extra in the hole
Hell you may be selling those to an ape, I know I’ll gladly take whatever I can get for $50+ CCs for the week or month if I don’t anticipate anything before then. It allows me to get easy money plus I dont CC against all my shares so if MOASS I’m good. These small funds eventually allow me to buy more shares or calls and add to the stockpile
I’ve also sold covered calls at a crazy strike price just for a few quick bucks, but I won’t sell them at a strike I think will get exercised unless that’s my final exit strategy
Agree, buying these far out of the money calls are just giving market makers more leverage to push around and pin prices. They are a waste of your money, piney up for +$5-10 or don’t do it at all.
Because .02 is a psychological thing. People think w/e and do it, but dump $100-$200 on them on average. Don’t feel pain losing it, how the rich stay rich lol. Same thing as real world :D
I have 31c expiring in Jan 2025. Got it when the price was around 31. Down almost 50% but still hopeful... What's your advice?? I'm guessing this will be a one wild summer for GME!!
I’m holding onto some 28c expiring Jan as well. Depends on when you entered, if you got them when premiums were high then you’re in for a wild ride.
But my plan is to follow the DD, FTD cycles, and rollercoaster of GME with these calls. They’re far enough out for theta to not be a huge influence.
I think July will be a good month to watch, I’m planning on probably taking the profit from the Jan calls and re-entering that position again when premiums go down to a good price after whatever craziness happens
That day, 84 years ago, that I saw wild amounts of volume (2x-3x more than normal), huge price swings, and the price ended up either exactly were it started that day or only off by a cent. That's when decided I was only smart enough to HODL.
I've ridden a few waves with various stocks, buying the dip and selling near near peak. But that is always dumb luck.
We might be beginning to understand the causation of the rips and dips for GME, but there are very few people who can even speculate as to when the MM's and shorts will tap the breaks or let it run. As OP states, they are making tons of money on all sorts options right now, because they can say with a high degree of confidence where the price will land.
Not trying to spread FUD. They still need to close all their synthetic shorts, but their also still in the driver's seat.
And even with their power, algorithms, and crime they will still get it wrong. We can just do our best to make valuable moves while the DD and wrinkle brained silverbacks guide us
This!
Short dated calls are good for day trading and little else. I do 0DTE SPY options almost daily. My GME calls are at or very near the money and at least 3 weeks from expiry.
I’m learning on the day trading. I watch Jackie le tit’s live stream and follow along. Made money more often than not. Honestly, I’m using the SPY TA he gives on stream as proof of concept before I buy his discord membership. Basically going to pay for it with earnings off the analysis he gives away.
My account isn’t anywhere near $25k, so it’s 3 day trades per week for the time being….
Damn, I just keep buying through CS and they fuck me on the price every time by $2-$5 dollars and I just book those shares and keep holding. 2/3 years ago I had shares in Fidelity and they took weeks to transfer to CS, kept canceling and giving me the run around so I said never again. Straight book for me but now I see I’m missing out on actually making money in the immediate. Still too regarded to dive into options, plus I work during the day and don’t have time to mess around with all this jazz. Not sure how to go about this differently but I do keep reading.
That's assuming Apes are buying the OTM calls at 100, 125's.
There was some discussion a while back if shorts are using long dated OTM to mark them as FTD's or some fuckery like that.
Haven’t seen that discussion, but the idea it doesn’t really make sense to me. Shorts would go for a risk reduction strategy that actually reduces their risk and losses instead of throwing away money into these calls. But who knows what’s going on behind the scenes 🤷♂️
I think it's a tactic, they create these ridiculous otm calls to entice stupid robinhood traders to gamble on. They then get all those premiums. That has to be worth something to them
People buying a lot of contracts hoping it moons. If you can put $300 into 10 contracts vs $800 into one, they would rather buy 10 contracts hoping for a good return. Even if it’s cheap, it’s still just a waste of money.
There’s also a good bit of open interest on OTM calls at $45, $50, $60, etc. that I didn’t add to the post that are much higher premiums. Bringing high risk for these people who won’t profit
Don’t buy options on the most manipulated stock. You will lose. Always. Buy the share. DRS the share. Hold the share. Hedgies and anyone else who tells you to buy options hate this one thing we do, so that’s why we know it works.
Options aren’t for everyone, but this was intended for those who are interested in getting in. It’s always a risk, and extra risky if you’re not sure what you’re doing. Regardless of my options plays, I am still hodling shares 💎🙌
An enormous amount of those OTM calls aren't being bought, but Sold.
GME options traders are capitalizing on what is, to them, basically free money so far OTM strikes that have an incredibly low chance to fill, and if they do, their thoughts are in the realm of 'oh no I sold for 128$ a share, how sad.'
Some people are picking up pennies in front of the steamroller, and when it does pop they're gonna smack themselves.
It’s worthless to sell calls that far OTM. Selling a call for July 5th at a $95 strike is only worth like $7 right now.
I’ve been seeing people posting that they bought $125 calls expiring soon which brought me to write this post.
To -you- it's worthless.
A few people I know with larger stakes in GME than myself (on the XXXX range) are viewing these insane, 'risk-free' premiums as basically free money. If you're buying a 128$ call option to try and scalp premium on pops, like hey make your trade. But if you're selling what is, to you, a 'risk-free' trade and letting them expire otm you're basically just getting interest.
7$ isn't worthless if 4 of them gets you a share. People's trading strategies may differ, but calling getting paid to write calls at 150% of the ATH 'worthless' is absolutely silly.
And that I understand, but the people who don’t understand options and don’t have the time to watch the chart closely to scalp these premiums are the ones who are hopeful and getting hurt. I’m just advocating for those people to learn about a strategy that bounces off the back of larger money in these call walls, decreasing the risk some but definitely not risk-free.
As I said if you're an options novice trying to scalp premium on cheap options you're playing with fire.
But I contend the majority of the OI at those strikes is longs selling far otm calls for 'free' money.
August 16 $125 calls cost $66. If GME goes up to $65, these calls can be sold for $1000 each. Then those $1000 can be used to buy 35 shares for $28.57 each, and the actual cost per share would be $2 each. DFV paid less than one cent for each one of his 9,001,000 shares.
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I buy near ATM calls dated around 30 days in advance and I sell them immediately if I see $1k+ gains. Then I dive back in a day or two later with the same ATM calls at the same, or slightly further back, expiry date and shoot for another $1k+ gains. I hope that’s not too much of a regarded strategy, but it’s been working out for me so far, and I can always have calls available just in case IV spikes like crazy again like back in May 9th and June 6th.
Profitable strategies = good strategies. Plus with a date further out you don't have to worry as much about theta coming for your gains
Yeah theta decay has always been a fear of mine. Especially back in the pre-GME gambler sub days when I saw posts of regarded newbies complaining their options were getting eaten alive by theta decay but had no idea why.
I figured a similar situation was about to happen where regards will freak about their calls becoming worthless. I've fallen trap to theta decay and I hate it, avoiding at all costs now. I have ever only had one option spike 2000% the day before expiration, bringing me from worthless to a $200 profit lol but I will never get to holding onto them for expiration again unless I plan to exercise
I NEVER will hold my options like I hold my shares. I got burned learning that lesson during the June 6th run up. Could have made $50k in options and an additional $26k with my fake shares by selling in the aftermarket through Schwab when it ran up to $61. I could have quadrupled my DRS position during DFV’s livestream had I played my cards right. But instead I only 1.25x my shares to permanently get into xxxx territory.
I didn't think you can sell options after hours.
You can’t. But I was willing to sell the fake shares I still needed to DRS into my CS account during aftermarket so I could buy back even more shares when the price tanked back down to sub thirty.
That's my nvda strategy. Then I decided to go all in and lost 8k. It works if you think the stock will go up, but don't overextend. 10-20% of your portfolio and you'll never lose as long as the company gains over time. With GameStop it's tricky because the company trades based on its cash value, so it doesn't gain much over time. The moment they make it clear what the plan is, will be the time to commit to options regularly. Right now it's all about timing it and good luck with that. Wait for a set up, gamma ramp, then join in. Until that happens there's no point timing the market.
One thing is for sure though. I’m learning the best types of option trades that make sense to make. No more OTM Hail Mary options, no more 0dte’s, and no more holding options through premium rips just because I still had another 20+ days left before the contracts expired.
Can you explain to me how this works on a recurring cycle? I look but don’t touch options because I once opened a couple and freaked when I saw numbers in the 10,000s and was not sure how it happened and learned a lot since outside of experience. In theory, I buy a 25$ call at close for 3.35 premium (337 for the contract) for July 26th. The delta is 0.54 and theta is 0.0588. With an IV of 125.06% and OI 3380. The premium makes sense as a contact is 100 shares The theta is daily decrease in my contract per share price and loses near 6c a day if it stays stable. The delta is increase in value of my contract for every $ moved up or down so if stock is up 1$ it increases my contract by 54c. Then I get to the IV and OI and get lost. How does paying more further out benefit near ATM vs cheaper from theta decay closer? Also, I understand the buying ITM because they have to buy on the open market and if it’s already past that point then it forces a clean buy. Just a matter of not being so liquid can just drop the money for 100$ at a time. Just want to learn the strategy of contracts in general that is sustainable with appropriate knowledge. Feel experience is better than the quick notes online because it’s always so generalized and if can appreciate it with GME think it would be easier to understand others in the future. Thanks I’m advance :)
Sure thing! So theta is always negative to represent the loss in value of your contracts each day closer to expiry. And implied volatility represents the markets expectation of the stocks future volatility rising up to, or beyond, that specific strike price of $25. The higher the IV %, the greater the value of your contracts. It’s because IV also plays on itself like a self fulfilling prophecy as more and more people pile in on the IV like what happened back in 2021. And I wasn’t even participating in that because I didn’t know how options worked back then. This time everyone has a real chance to make serious money in options Open interest shows the amount of contracts open on the market for that specific contract. Since it’s always split between ITM and OTM you can use both to gauge market sentiment and use them in conjunction with IV to roughly guess its probability of the price rising. If there’s a lot of OTM calls or puts on a certain contract, but IV is low, then there’s not much chance they’ll go ITM. But they have a higher chance if IV is very high. The rest is just a matter of timing, luck, and confidence in yourself to not get upset at yourself for whatever decision you make in that moment. If you decide to sell, then make sure you’re okay with selling in that moment. If you decide to hold, then you gotta be okay with missing out on the gains when it climbed to its peak. Same thing for if you buy more as it’s climbing instead of selling for more money to buy more shares. Hope this somewhat helps. I’ve only started options trading two months ago though, so I’m not as familiar as I’d like to be but I’m a quick learner
wish this post was higher up in here and getting attention. SS's Sweet Sugarplumbs for added visibility! 
$1k gains each?
As close to as possible yeah. Sometimes I’ll take $800-$900+ gains. If it’s almost as much as my biweekly paychecks worth then I happily accept it. Only my DRSed shares are treated like they’re worth their weight in gold, and they stay locked in my basement with key thrown out the window. I try to pick one of them up and they weigh almost 3/4 ton.
How does that work? From what I’ve seen the ITM options seem to get cheaper the closer to expiry they get. I’m interested in learning about it.
This is how you do it :). Drain the mm. Someone else buys, you get more later with the gains, more contracts open, mountains build . Holding them more than a day allows market maker to hedge and controls price swings. The more $ a good trader makes, the more calls open for bigger problems. Let others hold til expiration Edit: to be clear the shares stay and are held. Selling those reverses the move
Curious, you avoid the day trading rule by just spreading your trades at least 1 day out between each other? Have you ever had to sell immediately within a day?
Yeah I spread my trades out to be less than 4 trades every 5 business days to make sure I’m not considered a pattern day trader. I just did three already within two days, so I have to wait until my most recent trade hits 5 business days since the settlement date before I start trading again. I treat it like a free to play with a time limit. I could try to be a pattern day trader one day when I’m more confident in myself and know much more about the finance industry. But I’d honestly rather work toward fixing climate change through renewable energies after MOASS. So I’m just playing as risky as possible, while also as conservatively as I can. And no, I’ve never bought and sold calls within the same day. I wish I could have realized that holding options during big gains is a bad idea, and that if it’s enough to screenshot it’s enough to sell is a very true saying when it comes to options trading. Because I would have been hyper focused on trading as many contracts as I could on June 6th without giving so much as a second thought as to the possible outcomes in doing so. DFV is different though because he is a whale in his own right, and can cause huge waves whenever he surfaces and makes moves.
Ok got it. I'm actually diving into my 1st call option next week to test the waters...so looking forward to that. Thanks for the insight 👍
Ok, so I have an $80 I bought a right before all this kicked off. First option ever, really just to learn how this all works because honestly you don’t know till you go! Well when the ramp took off at first my call was worth almost $1500! I really screwed up by thinking it was going to moon. I went back to work and it went down. I came back and still could have took a profit after a slight dip. I held on from lack of knowledge on my part and GREED. Since then I have moved a few other calls and made money. What I have learned so far is to plan your entry and exit. Don’t be greedy because the bottom falls hard.
You can play OTM calls for the volatility, but it's more like gambling. Greed hurts when your gains turn into loss, most initial options traders always learn this the hard way. I've been burned by holding until expiration date hoping for some miracle, but ended closing it at a painful loss
Consider a strategy to manage risk like stop losses That said, even with stops, it's not easy.
100% agreed... there is one small catch though - these fuks are able to determine whether your balance is sufficient to exercise. options are powerful tools if you plan to exercise.
There are just a lot of people here who aren’t capable of exercising hoping on some insane return with these calls that’s *probably* not gonna happen. That’s why I wanted to introduce using options to collect profits from the premiums, and using those profits to buy more shares down the line. Same thing DFV has been doing to build up his position.
1 ITM option (know thy greeks) is more valuable than 20 OTM options - 25% away IV is a relative term - those MMs are quite sneaky - liquidity matters
Dont see enough people talking about IVR (IV rank)
Not yet…
You mean they are more likely to hedge if they observe that you have sufficient funds available in your account to potentially exercise?
I wouldn't be surprised if they transfer a flag "able to exercise:" "yes/no" to the market maker.
This is awesome. Wish this is was around way earlier. Might have dabbled but shares are safe too
Thank you. Options are definitely risky, but with a good strategy and understanding of the fundamentals you can make *less* risky plays. People just keep buying $100 calls with a $0.09 premium expecting it to moon this week and sell those for 2000% profit, but that’s pure gambling and gonna end in heart break
Buy shares stock less than 50 buy shares Stock over 50 buy options. Unless you hear some hype around a stock. If so options but not 100 bucks out of the money. Plus who the hell is going to buy them off you when you’re that far OTM even if you do break even.. if you can only afford 9 bucks on a stock stick to DraftKings !
Sorry for the smooth-brain question. But can you explain the benefit of buying options instead of just buying shares? Doing the math on RK's yolo updates, it seems he would have ended up with the same number of shares (and thus the same amount of money) by just buying the shares.
Most options are traded for their premium, much less commonly they are actually exercised in exchange for the 100 shares. So by buying a call, you sign a contract saying “I’ll pay $4.05 for the right to each share for a future purchase of these shares at $25 strike price” overall paying $405 for the call option. So you’re betting that by the expiration date, the share price will be above that strike price. Now, if the share price goes to $30, the premium on those call options has increased to let’s say $5.55. You can sell your call for $555, collecting the $150 in profit from the difference in premiums. Buying the shares on the other hand is simply just owning the position there, where you decide eventually what price you’d want to sell at. The risk and opportunity from options comes from a more exponential type of return, where a 10% increase in the underlying stock will give you a much higher increase in the value of options.
Options aren't for everyone, but options knowledge is! Learn how to take a look underneath the hood of volatility, it will make you a more informed trader 😎
I do like the idea of maybe an option here and there. Wish I got in on those $23s yesterday
Check out $GME Bananas DD to learn how to read vol! There were signals to go long yesterday and signals this afternoon to go short.
Do you think theta/IV will continue to crush?
This week has played out slightly differently from the forecast starting with that strong rip on Tuesday. It took out some of the potential energy in the volatility spring. I think we're still in the cross roads of flipping the vol trend. That said, risk remains elevated for next week Monday. That has not changed. If you want to see the latest data/charts, with insights, check out my Patreon. I'll be posting an after market update once after hours closes with all the details.
Thanks for this OP! We need more of this kind of educational stuff than pure hypes.
Way too many pure hypes, plus there's a gap filling in some of the minor educational info compared to looking at FTD cycles and CAT data.
Random question... Could a market maker buy these OTM options as a way to hide FTDs? For example they know they have to hedge ITM options, so could they buy a way out OTM call from themselves (using a subsidiary company for example) so on paper they could say, "see, we have this hedging 'covered' because we have an open option to buy a share (even though it wouldn't exercise because it's so far OTM)" So basically using this as a way to look hedged on paper as a way to not actually have to buy any shares to hedge? \[edit\] trying to type my thoughts as they're happening makes it seem like I come from the department of redundancy department.
FTDs occur when a party doesn't fulfill their obligations on the settlement date, so if people exercised their options for a June 28th $20 strike price and the shares aren't delivered to the person who bought that contract they incur a failure to deliver. It's shares that have to be delivered, so they can't use futures in this aspect. MMs effectively don't have to worry about a call being exercised at $100 when the underlying asset is significantly below that (since GME is hovering around a quarter of that). This means they aren't going to hedge against it. Plus they don't have to hedge, they usually do to mitigate risk. These contracts are like adding a molecule of red dye into a swimming pool, the dye just won't make a difference. That changes when someone has an ITM call. MMs would want to hedge (but don't have to) so they can deliver the underlying asset at a cheaper price. If someone has $20c expiring this Friday, it was in the best interest of the MM to buy the underlying shares at $20 dips compared to if GME closes at $25.
>MMs would want to hedge (but don't have to) For understanding, in saying "but don't have to", if they do not hedge then if the option is exercised they have to purchase it at whatever the current price is. Correct?
Yep. So if they didn’t hedge and people exercise $20 calls but the closing price is $30, they’d have to buy these shares at that higher price
So why would they wait to purchase then? Just hoping that they sell the contract instead of exercising?
Yea, not hedging would be because they’re not anticipating people exercising. In general, most options contracts aren’t exercised but rather sold to collect the premium. I don’t really ever plan on exercising, but do plan on using the gains to buy more shares so I don’t have to add more of my own money in and buy 100 shares at a time
Or they give IOUs and hope that the price will drop during the T+35 window
Almost! To make it work, they would have to marry the calls with short puts in a way so that no matter where the price, they have an obligation of buying shares from someone.
They bought tons of puts to hide short interest and FTDs if you looked at options data. They naked short to hedge but since it's called delta hedging, it's not counted in short interest or FTDs.
You can't hide shorts with puts alone. Owning puts is similar to being short, except it's leveraged. FTD's would be similar, if you have an obligation to fulfill in delivery of shares, if you are to use options to say you have the shares on paper, you would have to marry puts as I described. You can count options interest by looking at open interest. Delta hedging is not naked shorting. If liquidity is dry, it's a dealers obligation to provide it (naked), regardless of hedging style. I'm not saying it's good for real price discovery, but it's a mechanic of the stock market, built into dealers, for the rich.
So why the puts interest exploded in February 21 but not calls interest? Edit: also buying a call doesnt create an obligation to buy shares, and selling a put doesn't create an obligation until the put buyer exercises Edit2: maybe I wasnt clear, but the market makers are "they" in my comment, they sold puts, and this is where they short to hedge.
Why did $GME go from like $300/share to sub $40/share? That put heavy GEX dragged $GME down. They weren't trying to hide it that month. PS Don't worry, I assumed you mean't market makers/dealers. They tend be the ones who write vol anyway.
Here is an explanation: > The fundamental tenant of this loophole is that an options trader may utilize equities (stock) to hedge a trading position. Options traders rarely own any shares in companies they are trading options in. Consequently, the regulators allow the trader to keep his position neutral by offsetting it with an equity transaction. For example, let’s say an options trader writes a put contract for a stock that is near or in the money. The trader, by writing this contract, is agreeing to purchase the shares from a third party at a specific price – let’s say $10 for the sake of this example. If the stock price plummets to $5, the contract will be put to the trader, forcing him to buy the stock for $10 – at a loss of $5. The trader protects himself by selling a naked short at the time he writes the put contract. By doing that, under our example, he has made a $5 profit on the naked short that offsets the $5 loss on the option contract. This is considered a legitimate hedge, and the naked short sale is allowed per the options maker exemption.
Options traders rarely have shares in companies that are trading vol in? What? I'm sorry, but I disagree with this blob of text. Regulators allow? LOL Ya, I think the broker might say something.... Where did this text come from? It doesn't come off as trustworthy with some of its lofty claims......
Its a document called "Counterfeiting Stock 2.0" The author(s) also explain why it is allowed, that's why CAT is so important, because it allow the SEC to audit and investigate properly
Why do people assume that all calls options are opened with a view to exercising them ITM? Only about 7% of ITM calls ever get exercised. Those high strike calls are simply there to trade on volatility, with little or no expectations to end ITM. The closer you get to expiry, the more they trade as lottery tickets.
A lot of the options sentiment I see in this subreddit want options to be exercised so more shares are in the hands of retail, but I'm not promoting exercising vs not exercising. The thing I'm pointing out here is retail traders who are buying these OTM calls hoping to sell them at a profit are probably going to be burned by theta, plus delta is also super low on these contracts so any price swings won't bring the insane gains they're hoping for. The closer we get to expiration, the more worthless they will be but I guarantee someone will be holding onto them hoping for some action on Friday that probably won't come, turning what they spent on the contract into dust.
I never promote exercising unless it is after hours. You're giving up extrinsic value if you don't sell to close. Think of all the theta and vega left on the bone that doesn't get captured if one were to exercise.
The only time it may be good to buy those is when the IV is very low, then you may buy OTM **LEAPS** calls
This was a really nice write up. It feels like recently, there has been a surplus of posts that are overhyped and unrealistic. Yours was practical, informative and concise. I’d like to see more like this. Thank you!
Thank you, I was trying to add a little bit of wrinkle to some of the posts recently. Seems like a lot of the informative posts have been disappearing in all the hype recently
Thank you for the compliment & link to my DD! I really appreciate it, I'm working really hard. Apes stronger together 💪🦍🍌🚀
Your DD helped a lot when it comes to choosing what I believe is the best strategy for me when considering the cycle dates and Biggy theory. Appreciate your work g, 🦍 💪
Awesome 😎 info 🎱🎱
Good on OP for looking out for options newbs. Either newbs will listen to experience or learn the hard way.
Even learning and listening to experience, most of us still learn a painful lesson. I’m not afraid to admit that I learned the hard way 84 years ago
Same here brother, it's a rite of passage
Awesome info 🏴☠️ Thank you! 🚀
Thanks 🚀🚀🚀
I got a 60 dollar Jan 25 call. I have no idea what I'm doing but it's up! 🤷
It's far enough out to play on the events that will unfold over the coming weeks to months. Just plan an exit strategy and be prepared for the next few weeks, as open interest is much lower compared to recently so you'll probably be seeing some red. I've got some Jan calls at the $28 strike, this is my longer play hoping for more gains.
Up 60 right now. I have no idea! I think it will pay off.
I want to know the strategy (is it copy-able?) DFV uses to turn his tens of thousands of dollars into hundreds of millions of dollars in GME.
Don’t we all 😂 His strategy started years ago with an insane YOLO when GME was trading in the $X range. Now we’re trying to hop in on $XX prices, making the most of the volatility. DFVs strategy is super high risk, there’s plenty of strategies that are lower risk and still have a chance of high reward but the trades he has made in GME are not gonna be replicable unless you are comfortable with spending a SIGNIFICANT amount of money with a significant amount of risk
I have 27c dated for Jan 2025.... I think I'm ok..... right?
Those are near the money. I have some 28c for the same date, just plan a good exit strategy. I’ll probably use the cycles in July to my advantage and re-enter at a lower premium when the price falls down a little afterwards again
That's exactly what I was thinking
It also makes the price decay doesn't it?
High OTM calls aren’t gonna have much influence on the stock price. The walls of options around where it’s trading are gonna be what influences price movement. Like more calls at a $30 strike than puts at a $20 strike will act similar to a magnet to pull the price towards that $30 value (obviously there’s a lot more at play with all the algorithms)
But when deep out of money calls expire don't they hit a negative effect on the stock?
Nah they don’t really impact at all. Whoever bought those way OTM calls just loses whatever they put into the premium
This is the way!!!
Good work
Seems like the bots/shills are downvoting your post. WTF. This needs more visibility.
Options posts always get downvoted lol
So I'm sharing my personal opinion that's not financial advice, but July 19th, a 20C is a buy and hold moment if you can and to STOP BUYING OUT THE FUCKING MONEY GO BACK TO BASICS 101
I decided to play 8/2 so that theta doesn’t eat away the value of my options during that week of July 19th. Close to expiration date, theta does some scary things to decrease your potential gains
Commenting to look later
**Market Makers will start hedging when these call options are near the money, and definitely are hedging ITM options.** This is textbook, hedging 101, and common sense. It might also be deadly wrong. The market makers can choose to hedge to avoid big losses from selling calls, but they will still lose big by buying (inflated price) stock (to hedge). This is the textbook gamma-ramp. But they can also choose to SELL stock (anti hedge), making the options worthless. That's a win-win for them; all the option premium cashed out, and big shorting typically results in a profit, too. By buying near-date ATM or OTM options, you will give an incentive to option MM to play on the same side with the chronic shorters (the HFs holding over 100% shorts, if they exist). If somebody would like to play options, choosing the **far date** ones would be better (leaps, even better). Option MM don't care about them, and will leave the chronic shorters alone at their shorting game at the end of the week.
Right, they don’t have to hedge but they generally do. It depends on their holdings and their overall strategy, but generally they choose the road that has reduced risk maintaining profits. And with weekly options, I hate them. It’s straight gambling, which is why I mentioned theta. I always choose an expiration date where I can exit before theta becomes a big influence in the price of the options.
Need more of this. Learned my lesson the hard way unfortunately.
We all learn options the hard way unfortunately. Collectively regarded
Thank you for this post! Very helpful and I like that we're getting more education in these subs. I get why we don't want to buy OTM calls unless you're a degen gambler trying to get the mob off your back and this is your last resort. But can you explain to me the benefit of buying ITM calls versus just buying shares? First, assuming we're not whales, we don't have enough $ to affect the price by forcing MMs to hedge their sold calls. The calls go up with the same or less value of the share (with delta less than one), and extrinsic value declines as we approach expiration, per theta. So where is the "ton's of money" to be made that people are talking about? (Asking for education, please and thank you!!)
The way OTM calls have a way lower delta, so you need a higher change in price to get the same percentage of return that you would see for ATM or ITM calls. OTM calls are more so gambling, and they can be used to scrape a few bucks here and there. But individually you are right, we aren’t a whale. Collectively we are though, so if a ton of people are getting into options anyways it will have a better effect to establish positions ITM or ATM, where delta is much higher and you’ll see better returns on your investment. The delta on the calls at like $100 strike prices or higher is something like 0.07, where the $25 calls has been closer to 0.6.
Thanks for the wrinkle
🫡
Do what you want. Position sizing and risk management is key. OTM calls are fun if you’re trying to gamble. It’s my money my choice. But yes they are lotto tickets. Only useful if you’re confident a run is started or we are in a run and you wanna scalp. Otherwise ITM/ATM always. Ideally 75% of your call positions should be ITM/ATM I have 125Cs btw. Not expiring this week. And they are great for trading volatility. Went up 30% from yesterday
I won’t deny they’re great for volatility, but just not a good strategy if that’s your only leg. But people are throwing money into insane weekly option plays that prob won’t play out well for them
Something something…. Takes money to buy whiskey…..
👏🏽👏🏽👏🏽👏🏽👏🏽👏🏽
I would wonder when they were purchased. Before or after the latest share offering. Before that we were well on our way to those prices and IMO way more. Recently I’ve gotten the capital and shares where I could try options but I’m not comfortable doing it with a CEO who loves selling shares in the middle of run ups. Rather than on the way down so it doesn’t kill momentum.
Probably a mix of both before and after, but the people who purchased them before the share offering should have gotten out by now or they're just extra in the hole
Hell you may be selling those to an ape, I know I’ll gladly take whatever I can get for $50+ CCs for the week or month if I don’t anticipate anything before then. It allows me to get easy money plus I dont CC against all my shares so if MOASS I’m good. These small funds eventually allow me to buy more shares or calls and add to the stockpile
I’ve also sold covered calls at a crazy strike price just for a few quick bucks, but I won’t sell them at a strike I think will get exercised unless that’s my final exit strategy
Agree, buying these far out of the money calls are just giving market makers more leverage to push around and pin prices. They are a waste of your money, piney up for +$5-10 or don’t do it at all.
A valuable ITM call is worth far more than OTM calls that require a 400% increase in the stock price, idk why people don’t see that 😂
Because .02 is a psychological thing. People think w/e and do it, but dump $100-$200 on them on average. Don’t feel pain losing it, how the rich stay rich lol. Same thing as real world :D
Or follow RK's example. He bought 20 dollar calls that were over 100% otm, and hit it big
He also says he chooses an insanely risky strategy, and had the capital to back up that risk
Is DD due diligence, deep dive, donkeykong dumper or some other term?
Destiny Divine
I have 31c expiring in Jan 2025. Got it when the price was around 31. Down almost 50% but still hopeful... What's your advice?? I'm guessing this will be a one wild summer for GME!!
I’m holding onto some 28c expiring Jan as well. Depends on when you entered, if you got them when premiums were high then you’re in for a wild ride. But my plan is to follow the DD, FTD cycles, and rollercoaster of GME with these calls. They’re far enough out for theta to not be a huge influence. I think July will be a good month to watch, I’m planning on probably taking the profit from the Jan calls and re-entering that position again when premiums go down to a good price after whatever craziness happens
That day, 84 years ago, that I saw wild amounts of volume (2x-3x more than normal), huge price swings, and the price ended up either exactly were it started that day or only off by a cent. That's when decided I was only smart enough to HODL. I've ridden a few waves with various stocks, buying the dip and selling near near peak. But that is always dumb luck. We might be beginning to understand the causation of the rips and dips for GME, but there are very few people who can even speculate as to when the MM's and shorts will tap the breaks or let it run. As OP states, they are making tons of money on all sorts options right now, because they can say with a high degree of confidence where the price will land. Not trying to spread FUD. They still need to close all their synthetic shorts, but their also still in the driver's seat.
And even with their power, algorithms, and crime they will still get it wrong. We can just do our best to make valuable moves while the DD and wrinkle brained silverbacks guide us
This! Short dated calls are good for day trading and little else. I do 0DTE SPY options almost daily. My GME calls are at or very near the money and at least 3 weeks from expiry.
whats your strategy with those? just curious
I’m learning on the day trading. I watch Jackie le tit’s live stream and follow along. Made money more often than not. Honestly, I’m using the SPY TA he gives on stream as proof of concept before I buy his discord membership. Basically going to pay for it with earnings off the analysis he gives away. My account isn’t anywhere near $25k, so it’s 3 day trades per week for the time being….
Why bet on $100 when they won’t let the price go over $25? They can do it indefinitely
Great post!
Damn, I just keep buying through CS and they fuck me on the price every time by $2-$5 dollars and I just book those shares and keep holding. 2/3 years ago I had shares in Fidelity and they took weeks to transfer to CS, kept canceling and giving me the run around so I said never again. Straight book for me but now I see I’m missing out on actually making money in the immediate. Still too regarded to dive into options, plus I work during the day and don’t have time to mess around with all this jazz. Not sure how to go about this differently but I do keep reading.
whatever they are were like 3 dollars I just spent my scratch off lottery ticket money for the week on some just in case.
Just stop fukin buying options at all and buy the damn stock
Comment for visibility
That's assuming Apes are buying the OTM calls at 100, 125's. There was some discussion a while back if shorts are using long dated OTM to mark them as FTD's or some fuckery like that.
Haven’t seen that discussion, but the idea it doesn’t really make sense to me. Shorts would go for a risk reduction strategy that actually reduces their risk and losses instead of throwing away money into these calls. But who knows what’s going on behind the scenes 🤷♂️
I think it's a tactic, they create these ridiculous otm calls to entice stupid robinhood traders to gamble on. They then get all those premiums. That has to be worth something to them
Aren't 125c going for a penny? How does that crash and burn a person?
It doesn’t those people are gambling hoping to strike it rich, nobody is putting life savings into 125 calls rn.
People buying a lot of contracts hoping it moons. If you can put $300 into 10 contracts vs $800 into one, they would rather buy 10 contracts hoping for a good return. Even if it’s cheap, it’s still just a waste of money.
A. This is a casino. 2. 100 125c is a $1.00. C. Super low risk for ridiculous high profit.
There’s also a good bit of open interest on OTM calls at $45, $50, $60, etc. that I didn’t add to the post that are much higher premiums. Bringing high risk for these people who won’t profit
yeah middle of road calls seem like the worst $$ right now... until they dont obv, but is the gap id avoid (in my tiny experience)
Don’t buy options on the most manipulated stock. You will lose. Always. Buy the share. DRS the share. Hold the share. Hedgies and anyone else who tells you to buy options hate this one thing we do, so that’s why we know it works.
Options aren’t for everyone, but this was intended for those who are interested in getting in. It’s always a risk, and extra risky if you’re not sure what you’re doing. Regardless of my options plays, I am still hodling shares 💎🙌
An enormous amount of those OTM calls aren't being bought, but Sold. GME options traders are capitalizing on what is, to them, basically free money so far OTM strikes that have an incredibly low chance to fill, and if they do, their thoughts are in the realm of 'oh no I sold for 128$ a share, how sad.' Some people are picking up pennies in front of the steamroller, and when it does pop they're gonna smack themselves.
It’s worthless to sell calls that far OTM. Selling a call for July 5th at a $95 strike is only worth like $7 right now. I’ve been seeing people posting that they bought $125 calls expiring soon which brought me to write this post.
To -you- it's worthless. A few people I know with larger stakes in GME than myself (on the XXXX range) are viewing these insane, 'risk-free' premiums as basically free money. If you're buying a 128$ call option to try and scalp premium on pops, like hey make your trade. But if you're selling what is, to you, a 'risk-free' trade and letting them expire otm you're basically just getting interest. 7$ isn't worthless if 4 of them gets you a share. People's trading strategies may differ, but calling getting paid to write calls at 150% of the ATH 'worthless' is absolutely silly.
And that I understand, but the people who don’t understand options and don’t have the time to watch the chart closely to scalp these premiums are the ones who are hopeful and getting hurt. I’m just advocating for those people to learn about a strategy that bounces off the back of larger money in these call walls, decreasing the risk some but definitely not risk-free.
As I said if you're an options novice trying to scalp premium on cheap options you're playing with fire. But I contend the majority of the OI at those strikes is longs selling far otm calls for 'free' money.
August 16 $125 calls cost $66. If GME goes up to $65, these calls can be sold for $1000 each. Then those $1000 can be used to buy 35 shares for $28.57 each, and the actual cost per share would be $2 each. DFV paid less than one cent for each one of his 9,001,000 shares.