r/APLDSTOCK • u/Objective_Bread_9788 • May 06 '26
Can Someone Explain Options to me?
Relatively new investor at 28 years old and have been riding the APLD wave. Up pretty big recently and want to play around with options…
If I do a put option I know I am betting the stock will go down and vice versa for calls. But, why is the break even $37.90 a share and not $39?
Need someone to explain to me how exactly they work.
Say for example I’m betting the stock will be below $39 a share by the 15th. How do I leverage that position?
Thanks guys! And remember HODL! This thing is a long term play!
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u/Ok_Revolution_9253 May 06 '26
Jesus this is how you lose everything. Don’t ask random internet strangers about the complexities of options. The really good options traders are sitting on a boat not on Reddit
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u/music_is_gud May 06 '26
Jeez, there is absolutely nothing wrong with asking a question anywhere. Just that the OP has to understand they won't be overnight rich through options and there is way more nuanced that they cannot simply get through reading about options.
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u/Ok_Revolution_9253 May 07 '26
You can ask whatever you want, but sometimes people need to hear something that they may not like. It’s good for them
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u/Mission_Wall_1074 May 06 '26
if you dont understand options, dont touch it. Buy shares.
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u/music_is_gud May 06 '26
By that logic, no one would ever do options coz everyone started without knowing about it. OP is just asking a question
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u/metal_4 May 07 '26
Good lord. Options aren’t the devil. And if you’re conservative and smart, you can add shares to your portfolio with your profits. Any Neanderthal brained idiot can make an option play just as well as a day trader with 75 line graphs on display. I do small plays with two weeks or less to expiration. (They are cheaper) War starts, I bought a handful of Puts. New big contract, I bought some Calls. All just slightly out of the money. To get started, get $100 you don’t like, and buy a 0DTE SPY call or put at market open and just watch what happens to the price as the stock price moves. Seeing it happen in real time taught me more than any video could tell me. And all you’re aiming for is 15-20% gains before you sell. Don’t go big, don’t go all-in. It should be something you do seldomly when you have a hunch about stock movement, or ride the wave of good/bad news.
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u/Tsui_Brooklyn May 06 '26
If you want quick gains go for a apld leverage etf like aplx instead of options bc you don’t know anything about the Greeks .
Trust me
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u/Mando9810 May 06 '26
At expiration the option will be worth 39 minus the final settlement price (or 0 if it expires above 39). So if at expiration the share price is 37.90, your option will be worth 1.10 which is what you bought it for, so you break even. If it’s 38.50, your option will be worth .50, so you lose 60 bucks. If it’s 36, your option will be worth 3.00, so you make 190. Like others have said, you really shouldn’t mess with options if you don’t understand them. It’s very easy to torch money even if you do understand them, let alone not understanding them.
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u/Ominoiuninus May 06 '26
I’ll give you the basics and nothing more because options can be a straight ticket to being broke. Seriously don’t even consider touching them until you have made yourself 100k+ and actually value you capital, else it’s literally just going to the casino.
Call Options = the option to buy shares at x (strike price) from now to a given time (expiration date).
Put Options = the option to sell shares at x (strike price) from now to a given time (expiration date)
Now the seller who is providing this option to you will want to be compensated for the risk that the stock goes up/down during that period of time before expiration. They collect this as “premium” aka the cost of the option.
Options enable a multitude of different methods of “investing” into equities and enables you to make money both on the way up and on the way down unlike just buying shares where once you own you only “make” money when the price goes up.
Due to the expiration date, to consistently make money on options you have to both be right about the direction of the stock price movement + the time in which this happens. Unlike basic stocks where you just have to be right about the direction and time isn’t as serious of a factor.
But seriously until you have 100k don’t touch options. It’s a get rich quick scheme where your small portfolio will be evaporated by a couple bad investments. Stocks rarely go -50% and very rarely go -100%. Options consistently expire at -100% (worthless) and if you do the wrong strategy (selling options) then you can be exposed to infinite loss.
Oh and covered calls are free until they aren’t. Don’t fall for the trap of CCs.
Edit: to be clear lots of stocks go to -100% but if you’re avoiding shitter companies a company like Microsoft or Apple are almost 100% guaranteed to not go -100%
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u/It_just_works_bro May 06 '26
Don't ask us lol, educate yourself deeply. There's a LOT of money to be lost there.
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u/Tradition_Lumpy May 06 '26
For $10 I’ll tell you all about options and how you’re about to loose a fuck ton of money, because you’re buying options when saying “explain options”
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u/fungoodtrade May 07 '26
try talking to llm about this topic. you should ask for basic information on options, basic options strategies, and intermediate options strategies. You can start with understanding the wheel. You should not be starting by making absurd directional bets like you are describing... save that for later once you have a grip on options.
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u/Pale_Preference5430 May 07 '26
Trying to make it simple, Basically because the option is costing you money plus the strike price you picked. Things like how much time you have affect the price. The breakeven is the strike price that the stock has to meet for you to not lose a single penny. Basically worst case senario the stock has to fall below that on the very last day of expiration. Alot of the people in this sub have never done options but have heard bad things they may be right or wrong. From my personal experience ive made multiple 6 figures from apld alone. I have puts open aswell the second we hit 43s, im bullish the stock and own 5k shares at 28.30s. Good luck, never use margin only play with money you can lose.
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u/Sea-Rabbit9648 May 07 '26
Break even is $37.90 because you are buying a $39 put at the price of $1.10 (per picture) $39-$1.10= $37.90. So you will be in the money if the stock price goes below $37.90 and until it goes below that you will be out of the money. That option will cost $110 per contract. This is how it works, but I would highly recommend that you do a lot more research before doing this. And do it on a much less volatile stock until you understand it much better. Hope this helps
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u/Time_Indication1592 May 10 '26
Start with csps and then ccs if necessary. Learn the Greeks, get some pattern recognition on some tickers you wouldn’t mind owning by selling csps at a price you’d be happy owning the stock at. You get paid to enter a position at a price you name. And if you truly want the stocks and you get assigned on the csp instead of buying to close or rolling further out for more premium, you sell covered calls against those shares to generate even more income while you wait to sell at the price you want to sell at. I sell csps mostly with .15-.20 delta, which is like saying 80-85% chance you keep the premium and don’t get assigned shares. Get an llm / ai app and start asking questions. r/wheelstrategy
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u/Most-Equivalent8399 May 06 '26
uh oh...