Just trying put SPOT options


#1

I just bought 2 put options for SPOT $75 strike price time Jan 2019 for $1.25. The max loss is $250. How do you feel about this trade?

Right or Wrong?


#2

You mean jan 2019?

you expect > 50% drop in spot? nuts.


#3

Now I get why you think options are so risky.


#4

If you expect some drop, buy in the money. If it stays or drops, you make some money or lose little. Expecting 50% drop in 8month time frame is risky. I dont ebt on market dropping. I like to buy somewhat deeper in the money. It is risky too when economy corrects like it did in february. You can limit some downside by buying out of money puts or selling calls.


#5

$250 :slight_smile:


#6

That’s not the point, is it? 250$ is perfectly fine amount to make a thousand :slight_smile:


#7

Check LFIN, it went from $5 to $120 and then reached $28 before it was blocked by SEC !


#8

It ran up for the wrong reasons, though (Blockchain). I don’t see your point.
I bought KODK puts, and made some profit off of it, but SPOT is different?


#9

Worst case, my loss is $250.


#10

Yes, I see that. I made 4X on plenty of smallish bets. I am fine with your risk being small. I am just curious why 25? What makes you think spot will drop below 25 in 8 months?


#11

Today it is $158, even if it drops to $125 or $100, my puts may gain. All I need is just gain, not necessarily it has to reach $75.


#12

You expect somewhat of a large drop in a short time. Otherwise time premium will decay faster than it might be worth?

Either way, good luck. I am ocnsidering to buy some protective out of the money puts. probably in 20K-40k range, but not sure about which stock (spy?)


#13

Take SNAP, dropped 23 to 14.


#14

Use SPOT instead of SPY.

IMO, SPOT has higher chance to drop than SPY.


#15

alright, I Will take your word, and do that. IF economy drops, they’ll all drop anyway :smiley:


#16

That is why, I bet on SPOT. If economy tanks, SPOT will drop drastically than SPY.

I do not like to bet multi-thousands as I needed cash badly now.


#17

buy sq calls at the next 3-4% drop.


#18

Don’t bet on things going down. That’s a miserable way to make money, even if you were right.


#19

Just trying for fun. I have enough gains to wash off $250.

This year, no calls, only put SPOT.


#20

Can you tell me if I’m understanding this right? I did a finance class ages ago where I learned how to do the math but I want to make sure I’m not missing anything.

  • when you say you’re buying 2 put options it’s equivalent to 200. It’s some sort of short form? I don’t remember this part.
  • so you’re spending 200x1.25= 250 USD
  • right now price of spot is 153.5. You have the right to sell SPOT for 75 dollars ANYTIME until Jan 2019
  • it’s only worth it for you to exercise if spot goes below 75 dollars, so more than halves
  • if spot went to 50 dollars for example, you’d make 25x200 so 5K(!) If it went to 65 dollars you’d make 10x200 = 2K
  • The most you can lose is the 250 which you put in
  • the last point you’re making is that if spot falls to say, 120, then the value of your actual options will go up. So there is gain possible without spot falling that low. In practice, what usually happens is the options get bought and sold rather than the process of executing a buy at 75 dollars.
  • if spot goes up a lot, then opposite will likely happen - your options value will go down and may get close to 0 even before end date.
  • spot is likely to be reflection of whole market, so it’s a proxy to shorting SPY index.

Wow investors made a LOT of money on shorting SNAP! Though since they were all doing it the shorts were probably expensive.

I like this method of shorting because it is simpler than doing the SPY spread. I went into the interface for options stuff in e-trade a few days ago and couldn’t make sense of what was happening.