Talking stocks, trading, and investing in general

[gnatty8]

Pretty much. Black-Scholes calculation based off 30 day IV. And it's not 87% chance of max profit but that chance of some profit.k

This spread strategy works with either calls or puts and can be bullish or bearish depending if it's a call (bearish) or put (bullish.) You buy one option further from the current price of the stock then sell another option, same expiration date, closer to the money. The one you sell will give a bigger credit than the debit of the one you bought and your risk is limited to the spread between strike prices minus the credit you initially received. That credit is your max profit.

Note if this probability is backed out of BS option value, BS assumes changes in stock prices are normally distributed. In a normally distributed world, a five sigma event (i.e. a one day return that is 5 standard deviations from the mean) is expected to happen less than one day in the years since the end of the last Ice Age. In 2008, there were (by my reckoning) 18 days where returns were greater than 5 sigma. Just some food for thought.

 

[Piobaire]

Note if this probability is backed out of BS option value, BS assumes changes in stock prices are normally distributed. In a normally distributed world, a five sigma event (i.e. a one day return that is 5 standard deviations from the mean) is expected to happen less than one day in the years since the end of the last Ice Age. In 2008, there were (by my reckoning) 18 days where returns were greater than 5 sigma. Just some food for thought.

Completely true, but if one doesn't function under a set assumptions, one is either merely throwing darts or has decided to sit on the sidelines. Someone might try and say BS is still throwing darts, but you're way smarter than me in this area, and know even better than I do that this would be a horrible characterization. If one is to be in the game one can't have analysis paralysis to the point of being unable to act and has to accept there's risk involved. Again, as you know better than me, no risk, no return.

 

[Omega Male]

Ow, my balls.

 

[Texasmade]

Ow, my balls.

View attachment 1613608

Yeah I’m crying crocodile tears for those guys right now.

 

[gnatty8]

Completely true, but if one doesn't function under a set assumptions, one is either merely throwing darts or has decided to sit on the sidelines. Someone might try and say BS is still throwing darts, but you're way smarter than me in this area, and know even better than I do that this would be a horrible characterization. If one is to be in the game one can't have analysis paralysis to the point of being unable to act and has to accept there's risk involved. Again, as you know better than me, no risk, no return.

Totally agree, my point is more about being aware of what those assumptions are, how realistic they are, to what extent the world conforms to those assumptions, and of course, what your position looks like when they break down. I don't think you're write uncovered option positions, so I wouldn't lose too much sleep over it, but as to those probabilities? That's a compass, not a GPS.

 

[Piobaire]

Totally agree, my point is more about being aware of what those assumptions are, how realistic they are, to what extent the world conforms to those assumptions, and of course, what your position looks like when they break down. I don't think you're write uncovered option positions, so I wouldn't lose too much sleep over it, but as to those probabilities? That's a compass, not a GPS.

Gods, no! I'm all about defined risk in this market.

 

[Omega Male]

Yeah I’m crying crocodile tears for those guys right now.

As an economist, I think a wealth tax would be way more efficient. It should start just above whatever I end up with.

 

[jbarwick]

As a likely life long W2 guy, I’m never going to have to worry about wealth taxes

 

[Piobaire]

You just need a bigger W2...then again, so do I these days.

 

[gnatty8]

You just need a bigger W2...then again, so do I these days.

One huge benefit of W2 income is you can file your return yourself easily with TurboTax. Once we added rental properties to the mix, I quickly gave up ever trying to do my own taxes, and my accountant dings me for $600 just for my federal return

 

[Piobaire]

One huge benefit of W2 income is you can file your return yourself easily with TurboTax. Once we added rental properties to the mix, I quickly gave up ever trying to do my own taxes, and my accountant dings me for $600 just for my federal return

Yeah, we went through some years with rental property, me getting 1099'ed for consulting, her a K1, and some other stuff. Been using a CPA for 15 or so years and he's up to $400 for the entire thing now. I still find it well worth the money plus he'll be there if I ever get audited.

 

[PhilKenSebben]

Ok guys. Fess up.

How an unemployed day-trader burned by both GameStop and dogecoin ended up owning 20 billion units of a cryptocurrency known as ASS coin

Day-trader Eric Hackney is a "thrill-seeking amateur, goaded on by social media," Bloomberg reported.

markets.businessinsider.com

 

[gnatty8]

Haha, I was getting ready to be really impressed with that guy's luck, until I realized those 20 billion units are worth about 250 bucks..

 

[brokencycle]

Ok guys. Fess up.

How an unemployed day-trader burned by both GameStop and dogecoin ended up owning 20 billion units of a cryptocurrency known as ASS coin

Day-trader Eric Hackney is a "thrill-seeking amateur, goaded on by social media," Bloomberg reported.

markets.businessinsider.com

This reads like one of those articles written by some third rate investor who needs to stereotype retail investors to prove their job is valuable and not everyone can do it.

 

[Piobaire]

Closed my TSLA spreads from last week at 50% max profit. Could not find any entry points to new positions today.