myopenid : down 70% thanks to cheekon genius.
sgbuffett :
He sold puts for 400 Tesla shares @ $1000 strike price 1 yr expiry.
He collected $266 per put $266x400 =$106,400
Then goes on to say how easy money it is and how difficult it is to lose and how others have to work for the money and he just make this money at a snap.
Options on US market a almost fairly priced meaning buyer and seller can only have a slight edge. The edge is usually in favor of the options seller.
All the if this and if that are just possibilities ...the statistical odds are already baked in.
Chicken genius will start to lose money when Tesla dips below $734 ...he had a cushion but the buyer of puts also has the benefit of not losing any more than his purchase cost of the puts should Tesla go wild fly to $2000.
The seller of option has edge similar to casino operating a roulette wheel..for $100K of bets collected his profit is a few Ks not $100K. The main difference is the option seller has lumpy profits and losses ...when you average over time it is equivalent to a few % of his turnover..
Claiming big easy gains shows a failure to understand basics of options ...and this guy's was an options course peddler ...going up to the class and say do this do that and make easy money.....
5354 Wrote: Ladies and gentlemen
If you holding Tesla stock like that chicken
You should be selling CALL options!
If price goes higher, you gain from your stocks
If price goes lower you gain from your CALL options
Get it?
Sticw :
That's the fundamental use of options.
If one holds the stock but thinks it will drop yet doesn't have intention to sell stock, then one buys put options and sell call option to leverage on position.
If the stock indeed dropped, the put option will cover the lose of main stock and the sell call option will be bonus.
For chicken genius, he holds stock and sell put long period, he is betting that in a year's time the stock will be higher than where he sold. Mean time he took the 100k to invest elsewhere or buy call option at the support level so net he should gain. Chances are he still very bullish that Tesla will rise above 1200 in a year's time.
Niubee :
This Tesla will be going $680 or even $550.
This Chicken Genius will become Chicken Poops. Big Grin
https://sgfuck.net/Thread-Chicken-Genius-sold-Tesla-Put-options-easy-money
