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Contigo

Contigo

Sponsor
Messages
18,376
I don't know what you are investing in there MG but I'd love to learn. I only trade stocks right now so please feel free to enlighten me if you have the time and energy!
 
MaseratiGent

MaseratiGent

Member
Messages
162
Wattie said:
Fabulous...you tempted?
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No. I am an extreme bear. I an see us -20% on indices over the next 2m.

@Contigo - options (puts) on the major equity indices. There is a finite cost to buy them and that is the most I can lose. However, their P&L is non linear. The worse things are the faster they make money - but on expiry date your max profit is the intrinsic value (strike price - settle price). Health warning: they are dangerous instruments however unless you know them well.
 
Wattie

Wattie

Member
Messages
8,640
MaseratiGent said:
No. I am an extreme bear. I an see us -20% on indices over the next 2m.

@Contigo - options (puts) on the major equity indices. There is a finite cost to buy them and that is the most I can lose. However, their P&L is non linear. The worse things are the faster they make money - but on expiry date your max profit is the intrinsic value (strike price - settle price). Health warning: they are dangerous instruments however unless you know them well.
Click to expand...
Excelllent Goldi-nolocks, and the confirmed two extreme bears (Maseratigent and Froddy)

Wanted- 1 Bear,
Requirements- Must be extremely pessimistic that printing money out of thin air will cure a pandemic virus situation.
Attributes- the ability to sh1t in the woods is essential.

Anyone interested?
 
Wattie

Wattie

Member
Messages
8,640
MaseratiGent said:
No. I am an extreme bear. I an see us -20% on indices over the next 2m.

@Contigo - options (puts) on the major equity indices. There is a finite cost to buy them and that is the most I can lose. However, their P&L is non linear. The worse things are the faster they make money - but on expiry date your max profit is the intrinsic value (strike price - settle price). Health warning: they are dangerous instruments however unless you know them well.
Click to expand...
If that happens are you talking hundreds or thousands of %?
 
Wattie

Wattie

Member
Messages
8,640
T
MaseratiGent said:
No. I am an extreme bear. I an see us -20% on indices over the next 2m.

@Contigo - options (puts) on the major equity indices. There is a finite cost to buy them and that is the most I can lose. However, their P&L is non linear. The worse things are the faster they make money - but on expiry date your max profit is the intrinsic value (strike price - settle price). Health warning: they are dangerous instruments however unless you know them well.
Click to expand...
Translation/- this thing is so F3cked it makes three hundred percent look cheap.
WARNING- get out of your long position pension fund.
 
Froddy

Froddy

Member
Messages
1,072
Wattie said:
T

Translation/- this thing is so F3cked it makes three hundred percent look cheap.
WARNING- get out of your long position pension fund.
Click to expand...
Wattie, in response to your question, options are leveraged products. In the US system (which I trade, and I'm not familiar with the UK system - if that's what MG is trading), one option represents 100 shares of the underlying. They are priced according to their intrinsic value and extrinsic value.

So, in my case, one of my options is a Boeing put at a $345 strike price, expiring on the third Friday in March. I paid $1,800 for that option when the stock was trading at c. $331. The option therefore had an intrinsic value of $14 x the 100 shares = $1,400; the remaining cost is the extrinsic (time value). So I have spent $400 in "premium" to buy the opportunity for the stock to decline during the rest of the option's life. The deeper into the money you go, the greater the "delta" of the option. This is the rate of change in value of the option for every dollar that the stock moves. So, in my case, the delta on that option is 82. This means that the first dollar that Boeing declines will generate a profit of $82 and, as it declines further, the delta will increase to a maximum of 100, at which point the profit would be $100 for every dollar decline in the stock. On the flipside, if the price increases, I will lose the delta equivalent for every dollar the price goes against me. On top of that, option values depreciate with the passage of time (if you are buying as opposed to selling an option), and appreciate if you are selling. This is called theta decay. In my case, if BA does not move at all, I will lose $12 per day initially, and then this will accelerate into expiration until all the "premium" is lost; the option would still retain its intrinsic value, though.

MG has bought OTM puts, which have no intrinsic value; however, if price declines as anticipated and go ITM, they will pick up intrinsic value very quickly. As they had no intrinsic value at the point of purchase, they should have been relatively cheap. The percentage profit depends upon many variables, but I suspect it will be in the upper hundreds if not thousands.

In my case, I hold an OTM butterfly spread on the S&P which expires in May. I paid $219 for it last year; the max profit on that spread is $24,785 if the SPX closes at 2,000 points on the third Friday in May. The spread will start to profit below 3,000 points for now (it's called a "broken wing" butterfly, which is a type of custom butterfly spread which you can create).

Hope this makes sense! I appreciate it's confusing - as MG says, you need to know what you're doing!
 
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Froddy

Froddy

Member
Messages
1,072
Contigo said:
So basically you are shorting Boeing stock on a $100 pp level.
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$100 pp would be the max return. To reduce risk (and cost) I generally enter at a 70 delta which would produce $70 pp. If the price goes in my favour, the delta increases as the option goes deeper ITM. As I sit here now, my BA delta is 79.58 and it's down $9.81 with a profit of $810 for the day.
 
Wattie

Wattie

Member
Messages
8,640
Fellas I am 3 Durifsx750ml short to comment reliably on this.
What I can say is when I look at my positions some are + 5% and others are -5%.hopefully fools bought at -3%.
This entire market is fecked, the illusion may be about to end, it’s incredibly volatile.
Don’t get emotional, set your stops, tomorrow’s another day and a whole lot of new **** data.
 
Wattie

Wattie

Member
Messages
8,640
Maseratigent,excuse my forwardness but is that you in your profile pic?
I quite fancy u.:jpheart:
Before you ask, I’m taller than Hugh. (Just saying)
 
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Wattie

Wattie

Member
Messages
8,640
Froddy said:
Wattie, in response to your question, options are leveraged products. In the US system (which I trade, and I'm not familiar with the UK system - if that's what MG is trading), one option represents 100 shares of the underlying. They are priced according to their intrinsic value and extrinsic value.

So, in my case, one of my options is a Boeing put at a $345 strike price, expiring on the third Friday in March. I paid $1,800 for that option when the stock was trading at c. $331. The option therefore had an intrinsic value of $14 x the 100 shares = $1,400; the remaining cost is the extrinsic (time value). So I have spent $400 in "premium" to buy the opportunity for the stock to decline during the rest of the option's life. The deeper into the money you go, the greater the "delta" of the option. This is the rate of change in value of the option for every dollar that the stock moves. So, in my case, the delta on that option is 82. This means that the first dollar that Boeing declines will generate a profit of $82 and, as it declines further, the delta will increase to a maximum of 100, at which point the profit would be $100 for every dollar decline in the stock. On the flipside, if the price increases, I will lose the delta equivalent for every dollar the price goes against me. On top of that, option values depreciate with the passage of time (if you are buying as opposed to selling an option), and appreciate if you are selling. This is called theta decay. In my case, if BA does not move at all, I will lose $12 per day initially, and then this will accelerate into expiration until all the "premium" is lost; the option would still retain its intrinsic value, though.

MG has bought OTM puts, which have no intrinsic value; however, if price declines as anticipated and go ITM, they will pick up intrinsic value very quickly. As they had no intrinsic value at the point of purchase, they should have been relatively cheap. The percentage profit depends upon many variables, but I suspect it will be in the upper hundreds if not thousands.

In my case, I hold an OTM butterfly spread on the S&P which expires in May. I paid $219 for it last year; the max profit on that spread is $24,785 if the SPX closes at 2,000 points on the third Friday in May. The spread will start to profit below 3,000 points for now (it's called a "broken wing" butterfly, which is a type of custom butterfly spread which you can create).

Hope this makes sense! I appreciate it's confusing - as MG says, you need to know what you're doing!
Click to expand...
Honestly I have no idea what you’re on about.
I understand leverage but only as “danger” signal cos it multiplies losses and that’s coming from an instrinsically aware individual who is extrinsically subject to Durif.
 
Wattie

Wattie

Member
Messages
8,640
Fellas be very careful playing this game, some of the biggest co’s in the world are devaluing by billlions. They have been artificially manipulated higher for years.

It is a bloodbath, protect your pensions etc.
 

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rivarama

rivarama

Member
Messages
1,102
Let’s how the virus situation develops in Europe and whether the global growth forecast get axed (heard on Bloomberg that China growth might get to 0% which would be a first since 1949...) but we might finally have a proper correction on the way...

Although I feel slightly bad about the reasons why we’re having a correction - I am really hoping for a big one to get out of bed and go bargain shopping. Been leaving a lot of powder dry over the past 12months...
 
Wattie

Wattie

Member
Messages
8,640
Wattie said:
Froddys posts are technical- I don’t understand 2/3rds of them but don’t let that put you off.
His analysis pinpoints certain events and timings in the market that have the potential to move shares or commodities up/down. Time will tell what the action is......and that will often depend on news/events worldwide.it can also depend on the players involved in a particular commodity/stock. Ie a big bank on the wrong side of a trade may try to move the market.....dare I say manipulate....as has happened in the past.
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Mr Froddy you were bang on the money and deserve some applause. This is why traders with knowledge are good.....Worth their weight in gold some would say:alan2:

Manipulation in action.

Gold Suddenly Hammered By Multi-Billion-Dollar Sale | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com www.zerohedge.com
 
Froddy

Froddy

Member
Messages
1,072
So where do we go from here? Crash? Or (Charles Dow theory) distribution? Who knows?!

Short-term, my money's on the latter (unless, that is, there's bad news overnight).
Tomorrow could be emotionally painful for shorts, but just bear in mind that it's completely normal for instruments to retrace - nothing goes straight up or straight down.

I have a full day of work and travel away from my charts tomorrow (which I'm annoyed about). Fingers crossed for all ...
 
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