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Derpazoid69 t1_j2a5rcr wrote

This is why I don't screw with options, I only buy shares. For every gain porn post where someone posts a few hundred thousand $ options gain, there's 45 loss porn posts about people blowing up their account from $50-$100k to $250 using options. Why take the risk of being wrong? To make money with a call you have to be right about the upward direction of the share price AND the time frame, if you're wrong your calls expire worthless. If you had just bought the shares and you're wrong and the share price doesn't increase you still have the shares and the majority of the time they still have value. You can just hold them until they increase in value. I'm down 32% right now just holding shares of various companies if I had used options I'd probably be down 90%+. But I can hold until the next bull market and my companies increase in value. Holding shares extremely rarely results in your investment account going from $100k to $0.


slayer1am t1_j2ahfsb wrote

You've left out the safest method of trading options: selling them.

You sell a put, and you get paid no matter if it goes up or down or sideways. The only difference is whether you have to buy the shares or not, and even if you do, it will be shares you wanted anyway.

Let's say your put expires in the money, and you buy the shares. Now you sell a call option out the money, and get paid to hold the shares. If the price goes up, you sell the shares above your cost, if it goes down, you keep the premium.

Come over to /r/thetagang and learn the better way to play options.


MikoPaws t1_j2ao0yf wrote

I mean, depends on how you do it. If ya had $10,000 and wanted to buy MCHI, you could buy like 200 shares for about that much.

Alternatively, you could put about $1,400 into 2x 1-year call options ATM and control the same movement of 200 shares. If you're expecting something to rise but you're also nervous it could crash, this strategy allows you to pay an insurance fee so that you don't risk the same amount of capital.

The problem is that, because the call options are $700, WSB doesn't like to just buy 2 and call it a day. They go all in, and buy 15 of em, or heck maybe even realize they can get it cheaper and get 500 of them OTM epiring in a day and blow up their account to theta decay faster than they can give a handjob behind a Wendy's dumpster. To each their own


jimmiew t1_j2b8xr1 wrote

This. I can’t even afford 100 shares of SPY buy I can risk $200-$300 for an SPXL option and get massive exposure to the same market. It’s a built in stop loss


vengeful_toaster t1_j2ahiho wrote

Options can be less risky than buying shares.

If I sell a put at 10 dollars and the stock drops from 12 to 9 dollars, then I've acquired the stock at a cost basis of less than if I bought the stock outright at 12 dollars.


RockyattheTop t1_j2ammwr wrote

Except in a bear market if it drops from 12 to 9, it can also drop to like 3 or 2


vengeful_toaster t1_j2an3u5 wrote

But you'd still be down less than if you bought the shares outright thanks to the premium.

With shares you can lose it all if it goes to 0, but if you sell a put you at least will still have the premium.