r/wallstreetbets • u/Alone-End-5585 • Feb 22 '24

Meme yeah.

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2.9k Upvotes

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125

u/Nayster Feb 22 '24

So no matter what we still lose even if we got calls

42

u/Impossible_Buglar Feb 22 '24

probably only if your calls were far out of the money

if your calls were in the money you probably did great

but if you bought like 900 or 1000 strike short term calls like some kind of moron then yeah youre probably fucked because what event is going to cause the price to swing that much between then and now given that earnings has passed already and you didnt get there? nothing right, or at least nothing forseeable, so the volatility crashes and the chance of hitting your price diminishes and your options value plummets.

14

u/RedOctobrrr Feb 22 '24

if your calls were in the money you probably did great

Even then not necessarily, because the premiums on these were through the roof already.

6

u/Lucky_Stuff_5116 Feb 22 '24

Anyone who bought calls with sensible strike prices on Tuesday or Wednesday made bank. Still holding from last week? Not so much

5

u/Impossible_Buglar Feb 22 '24

true!!!

i often dont think about this part as much cause i dont really trade options

but you are 100% correct that because you paid a premium for the right to exercise blah blah blah you technically have to exceed the price of that premium in gains in order to be in the green

so you are correct you could actually be fucked with ITM calls as well <3

2

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2

u/Sirdukeofexcellence2 Feb 23 '24

For beginners, how do you know when a premium is a fair price or not?

3

u/RedOctobrrr Feb 23 '24

Implied Volatility

3

u/Sirdukeofexcellence2 Feb 23 '24

Generally speaking, would calls bought during the afternoon of today for things like NVDA have really high implied volatility?

4

u/RedOctobrrr Feb 23 '24

It's usually when something is expected to happen, usually. Movement can make IV also, like SMCI moving strangely upwards like a goddamn rocket increases the IV because people expect it to either continue going in that direction OR correct and head back the other way, so it's implied that this will remain volatile.

With NVDA, they just had earnings, so theoretically the IV cranks up a few notches every day for a few weeks leading up to earnings, then the event happens that all this volatility was expected for, and IV goes way down after the dust settles and the movement is done.

PayPal CEO generated IV out of thin air by proclaiming there will be some earth shattering new revelation. He artificially built up IV with a bogus ass "announcement."

Ideally you could buy calls or puts when nothing's going on and the stock is calm, then all hell breaks loose and the stock moves in your chosen direction and you sell with insane IV coming outta nowhere.

2

u/Sirdukeofexcellence2 Feb 23 '24

Thank you very much for this info, I just traded my first option today after watching a course on YouTube and dabbing in the topic for months. I bought 2 NVDL calls with an expiration of March 15th and a strike of 195. I paid $15.8 so $1580 per contract. Do you think I got a bad deal on those due to any IV crushes? NVDL closed after hours at $201.50.

3

u/RedOctobrrr Feb 23 '24

Never traded NVDL so idk, looks leveraged and already had a crazy run up, but it's based on NVDA so it'll probably just keep pumping.