Author Topic: GME deathwatch - how to profit?  (Read 82843 times)

BigMoneyJim

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Re: GME deathwatch - how to profit?
« Reply #100 on: January 31, 2021, 11:57:35 PM »
There is so much attention around GME I'm not sure what to think anymore.

Holding isn't quite enough, though. People have to keep buying in to keep the price high, right? I would be an interesting thought experiment to ask what if literally nobody was selling, but that's not realistic, is it?

I'm actually currently long in GME. I think what I'll do is cover my original investment and then keep the rest and effectively play the lottery with house money. I think I can still do that.

I mean, there's a point at which everyone starts going bankrupt, right? The deep pockets aren't literally unlimited, are they?

The only thing I'm sure of is that the moment I'll know the right time to sell will be right after the right time to sell. Presuming I don't expect GME to actually be worth its current price long-term.

gentmach

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Re: GME deathwatch - how to profit?
« Reply #101 on: February 01, 2021, 04:12:46 AM »
^ Yes - to an extent.  The problem is they have shorted > 100% of float.  They essentially short sold shares that didn't exist.  The price will not start going parabolic until they begin to close shorts, presumably.  The moment they start covering, and because there is a shortage of sellers (due to them shorting shares that didn't exist), it turns into simple supply and demand and will result in price skyrocket. If they sit there and bleed interest, the share price likely won't change much.  Their best bet is to somehow dramatically lower the share price first, THEN start covering...through ladder attack manipulation, or whatever method they can figure out.  I think we'll see some clever new tricks this week.

They should have been buying to cover days ago (driving up price), but they doubled down on shorts instead.  Not sure why...greed? Lack of cash? Refusal to be beaten by a bunch of "degenerates"?  Hoping to scare said degenerates into selling?  One thing we can be almost certain of is they were selling their winning long positions on Friday which might help explain the big price drops, even on companies that had phenomenal earnings reports (Apple for example).  There's only one reason they would do that.

They may be past the equilibrium point.  No one really knows exactly how deep they're in, and probably won't until after all is said and done.

Someone posted the hypothesis that there is a lot of counterfeit stock floating around.

https://old.reddit.com/r/wallstreetbets/comments/l97ykd/the_real_reason_wall_street_is_terrified_of_the/

In theory Retail Investors own 100% of GME right now because they own all the authentic shares.

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #102 on: February 01, 2021, 04:42:13 AM »
Holding isn't quite enough, though. People have to keep buying in to keep the price high, right? I would be an interesting thought experiment to ask what if literally nobody was selling, but that's not realistic, is it?
Let me take this through a few levels of what you might mean:
(1) nobody places new orders to sell.  So there's no new demand, but the books still have orders on them, at higher prices.
(2) no orders at higher prices - no sellers, no orders from previous sellers.  This is where a market maker steps in, and sells some of their inventory.  Later when someone arrives at the market to sell, the market marker can buy from them to replenish their inventory of the stock.

If I place a buy order for GME at $1, nobody cares.  There's no market selling GME shares below $1, so my order sits there, but it's useless.  Similarly, if someone places a generous buy order with a $1,000/sh limit, nothing happens if there's no orders under that price.  In practice, a high-frequency trading firm would swoop in and sell stock at $1,000/sh and take a huge profit.  Or maybe a smaller profit - since other HFTs are trying to fill the order at the same time.

So there's the order book, the market maker, and HFT firms all providing liquidity.

---
I read about the way market makers can cheat with shorting shares, from a random source.  When a short position starts, there doesn't need to be any shares!  According to that random (not reputable) source, most people get 3 days to find shares, but market makers can spend 3 weeks finding shares.  If the shares don't exist, how can a market maker claim to be short in them?  But that's what the claim is - that phantom short shares are created, and last until the time limit expires.  The specifics and details seemed too specific to be complete fabrication - I think it's one of the top 10 threads on WSB now.

Travis

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Re: GME deathwatch - how to profit?
« Reply #103 on: February 01, 2021, 05:32:15 AM »
GME deathwatch - how to profit?
There's an old adage about during a gold rush, the ones who make money are those selling shovels.

If you had capability to post YouTube videos, $1 ebook to explain what's going on, create "I bought GME" t-shirts, or something else, it would probably be a safer bet than getting your hands dirty.

Actually that's happening.

https://llamafury.com/products/military-investors-gamestonk-t-shirt?fbclid=IwAR0p5YDUGrqQ33Jr-OQoBI4QzdHfxk8gVU5jJVtC1_8NVdeLLMQmH3ueYaw

We seem to be rapidly approaching the "everyone thinks they're a stock-picking genius" territory again. The pickers are coming out of the woodwork here, on Facebook, and today on r/Army a soldier asked how he can get out of his TSP because "it did shit last year" because apparently 15% in a pandemic year just isn't good enough for him and he thinks he can do better.

Today's top growing Reddit communities are (in order):

-WallStreetBets
-Dogecoin
-RobinHood
-PennyStocks
-Investing
« Last Edit: February 01, 2021, 06:06:21 AM by Travis »

dignam

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Re: GME deathwatch - how to profit?
« Reply #104 on: February 01, 2021, 05:34:48 AM »
There is so much attention around GME I'm not sure what to think anymore.

Holding isn't quite enough, though. People have to keep buying in to keep the price high, right? I would be an interesting thought experiment to ask what if literally nobody was selling, but that's not realistic, is it?

I'm actually currently long in GME. I think what I'll do is cover my original investment and then keep the rest and effectively play the lottery with house money. I think I can still do that.

I mean, there's a point at which everyone starts going bankrupt, right? The deep pockets aren't literally unlimited, are they?

The only thing I'm sure of is that the moment I'll know the right time to sell will be right after the right time to sell. Presuming I don't expect GME to actually be worth its current price long-term.

That is my plan.  Going to sell what brings me to even then leave the rest in and see what happens.

sixwings

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Re: GME deathwatch - how to profit?
« Reply #105 on: February 01, 2021, 08:22:15 AM »
GME deathwatch - how to profit?
There's an old adage about during a gold rush, the ones who make money are those selling shovels.

If you had capability to post YouTube videos, $1 ebook to explain what's going on, create "I bought GME" t-shirts, or something else, it would probably be a safer bet than getting your hands dirty.

Actually that's happening.

https://llamafury.com/products/military-investors-gamestonk-t-shirt?fbclid=IwAR0p5YDUGrqQ33Jr-OQoBI4QzdHfxk8gVU5jJVtC1_8NVdeLLMQmH3ueYaw

We seem to be rapidly approaching the "everyone thinks they're a stock-picking genius" territory again. The pickers are coming out of the woodwork here, on Facebook, and today on r/Army a soldier asked how he can get out of his TSP because "it did shit last year" because apparently 15% in a pandemic year just isn't good enough for him and he thinks he can do better.

Today's top growing Reddit communities are (in order):

-WallStreetBets
-Dogecoin
-RobinHood
-PennyStocks
-Investing

yep this is going to go very badly for most people doing this. It's tempting for me to put money into GME but I'm sticking to my index + tech ETF strategy, the FOMO is real though.

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #106 on: February 01, 2021, 10:15:44 AM »
One way you can make money is buying a PUT option, but I have two problems with PUTs on GME.
(1) GameStop can print money (shares) and put itself in a new position - they might no longer be a $20/share company.  Their new CEO is experienced with remaking companies, and that was before he got all the capital he needs.  They could just buy another company, and be worth more.
(2) The PUT options are very expensive.  With GME at $270/sh, PUT options with a $270 strike cost $210.  If GME drops back to $20/sh, that's only a 19% profit.

Another way is to stand in front of a news-breaking freight train. I went for it, and sold unprotected, long-dated high priced call options.  If GME rises above my strike price, the holder of the option can force me to buy GME stock.  But today GME didn't even spike at the open... it just dropped and wobbled around.  I had hoped they would pressure the market makers today and tomorrow, creating a big problem... but they seem to have shifted to targeting silver.

I'm prepared to lose -400% my investment.  So if someone wants to imitate this, and isn't ready to lose a multiple of what they invest, it's too risky.  Selling "naked" call options has no limit to the loss, since you're paying whatever gains occur above a certain price.

ChpBstrd

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Re: GME deathwatch - how to profit?
« Reply #107 on: February 01, 2021, 10:23:11 AM »
One way you can make money is buying a PUT option, but I have two problems with PUTs on GME.
(1) GameStop can print money (shares) and put itself in a new position - they might no longer be a $20/share company.  Their new CEO is experienced with remaking companies, and that was before he got all the capital he needs.  They could just buy another company, and be worth more.
(2) The PUT options are very expensive.  With GME at $270/sh, PUT options with a $270 strike cost $210.  If GME drops back to $20/sh, that's only a 19% profit.

Another way is to stand in front of a news-breaking freight train. I went for it, and sold unprotected, long-dated high priced call options.  If GME rises above my strike price, the holder of the option can force me to buy GME stock.  But today GME didn't even spike at the open... it just dropped and wobbled around.  I had hoped they would pressure the market makers today and tomorrow, creating a big problem... but they seem to have shifted to targeting silver.

I'm prepared to lose -400% my investment.  So if someone wants to imitate this, and isn't ready to lose a multiple of what they invest, it's too risky.  Selling "naked" call options has no limit to the loss, since you're paying whatever gains occur above a certain price.

According to the wsb subreddit, the silver trade is a distraction orchestrated by the media and the hedge funds. I am seeing a little more chatter about AMC and BB.

I would take any quick profit on the naked short calls ASAP because this thing is unpredictable and not at all tied to reality. You're playing roulette with leverage there, and losses could exceed 400%. As they say on wsb "we can stay retarded longer than they can stay solvent".

bwall

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Re: GME deathwatch - how to profit?
« Reply #108 on: February 01, 2021, 11:07:36 AM »
^^^
+1.

This is not the time to stand in front of a freight train. Shorts are still at 100% (or more), meaning that the short covering that occurred and pushed the stock to $300 was merely replaced by renewed shorting. "The squeeze hasn't squooze." is what WSB likes to say, and I kinda agree.

Shorts are paying interest daily, which is small potatoes in this game, but ultimately leverage kills as surely as gravity, to borrow the phrase from @ChpBstrd.

I'd sell front week deep out of the money puts only a day or two before expiration. Fire and forget, make the trade and don't look at it again until Friday after close is the only way I could do it. It's not sophisticated and normally always a horrible trading strategy, but I can't control my emotions, so this would the only way possible for me.

Full disclosure: I'm not trading options in GME because I cannot control my emotions.

P.S. Game stock is getting plenty of free press out of this trade, so perhaps that will substantially increase their bottom line in the next months? Heck, I've been tempted to go into the nearest GME store and buy something. Anything. At any price. And I've never been inside one of their stores before. Ever.

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #109 on: February 01, 2021, 12:13:43 PM »
Consider WSB position right now, if they really have gone all in.  They're out of cash, and all their NW is in GME stock.  Now what?  They're stuck.  Without cash, they can't apply buying pressure.  If they sell, that creates selling pressure.

Look at the stock price moves.  Wed, Thurs, and Fri all opened with a spike in GME stock price, a display of power from Wall Street Bets - and that was impressive.  But the Wednesday close at $347.51 was followed by a Thursday open at $265, because several brokerages blocked buying GME stock.  Thursday was a down day for GME, showing that WSB is not a freight train.

Although Friday opened strong, the closing price was much lower.  And further, the "gamma squeeze" of WSB would be aimed at options that expire every Friday.  If they want market makers to suffer, why reduce the pressure Friday?  Or today?

The stock price fell slightly over the weekend, and then fell some more after moving up just 2%.  It looks like someone is selling.. but who?  Not only do WSB investors have tons of GME, they went all in, and have nothing else.  I think the explanation for today's price change is people selling their WSB stock.  That's how they could afford to go after silver, in my view.  If they're not selling, why is the stock falling?  And why would silver be pushing much higher right as GME falls lower?  That seems like too much a coincidence for me to blame in on their enemies, the hedge funds.

Look at Robinhood getting a $2.5 billion loan on short notice.  Hedge funds and institutional investors have far more than that, and some of them seek to find a profit in events like this.  I think WSB lacks cash, while their opponents have drawn on billions of reserves to profit off the situation.

The calls I sold are a very tiny part of my account at Interactive Brokers - they won't move the needle if I'm right.  I sold calls near the top end, and plan to "buy to cover" if the share price gets within $100-$200 of my strike price.  But take a look at Feb 5 and Feb 12 options - the highest strike options lost 75-80% of their value today.  If the gamma squeeze targeted last Friday, that makes sense - it's over.  But if it targets this Friday... they are paying a premium for options that aren't helping to push the price up.  They're wasting their money.

Based on what I see in the markets, WSB is probably losing.  They might attack again this week, but I think they'll meet opponents with much deeper pockets, who will absorb their buying power and profit off the attempt.

crimp

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Re: GME deathwatch - how to profit?
« Reply #110 on: February 01, 2021, 02:15:48 PM »
There are some rumblings that the price is dropping because of something called a ladder attack, in which the hedge funds sell each other the same shares at progressively lower prices to catch people with stop loss orders. It's entirely unclear to me whether or not this is actually happening or not, or if the WSB crowd is out of money to buy more shares than are being sold.

People are talking about trade volume as a measure to indicate whether or not retail investors are selling or not. The only thing I'm sure about is that I don't know how to read any of the indicators people are talking about.

ChpBstrd

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Re: GME deathwatch - how to profit?
« Reply #111 on: February 01, 2021, 02:54:34 PM »
I would not view the WSB crowd as a static number of people who are already all-in. As their exploits have gone viral, the number of people visiting the forum is going up. As some people sell out, others join. Itís not a Ponzi scheme but it has the same unpredictable number of people who will sign up. As Bernie Madoff demonstrated, that can go on for a very long time.

Additionally, momentum funds and cap weighted index funds are required by their mandates to buy GME. Then there are the hedge funds betting against other hedge funds, and new positions opened by new short investors, all pouring money into the ecosystem.

As things go up, there are certain feedback loops that keep them going up. The funny thing about this short squeeze is that new participants are coming in to fuel both the long and short sides. Utterly defies prediction.

dignam

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Re: GME deathwatch - how to profit?
« Reply #112 on: February 01, 2021, 06:12:42 PM »
Holding naked short calls on GME would scare the shit out of me.  But, more power to you.

With how comparatively low the volume has been today, I really don't think WSB sell-offs are to blame for the price decrease.  Volume would need to be huge for WSB to move the price like that.

Just looked up option chain on GME.  Currently there have been 5,057 Mar. 19th call $800 strike contracts purchased.  If my math is correct, that would cost ~ $25mil.  Take that how you will.

chasesfish

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Re: GME deathwatch - how to profit?
« Reply #113 on: February 01, 2021, 09:59:02 PM »
Congrats on the naked calls....great move but not something I have the stomach or liquidity for

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #114 on: February 02, 2021, 07:20:15 AM »
ChpBstd - I completely agree WSB isn't monolithic, but my post was already too long to cover that.  I expect their core leaders are nearly all in on GME (and the other stocks), and that recent arrivals don't necessarily have the same goals and risk tolerance.

Another key point - this attack is a victim of it's own success.  Pushing the shares higher gets more difficult as time goes on.  From Yahoo data, back on Aug 14 shares cost $4.60 and volume was 3.5 million.  If WSB asks everyone to buy 0.01% of the volume, that's 350 shares x $4.60 = $1,610 invested that day.  People interested in the stock market probably have that kind of money.  Now fast forward to Friday, when the stock opened at $380 and had 50 million shares change hands.  To invest the same 0.01% that day required $380 x 5,000 shares, or $1.9 million dollars.  Now you're taking about amounts almost none of them have in cash (not GME stock - selling that defeats the purpose).  They have more members now, and maybe it's debatable if they have more cash (after using up so much already)... but it illustrates how pushing the stock around last year was much easier than this past week.

Looking at the trading volume versus the stock price, I see more reasons why I'm likely to profit on the calls I sold.  Jan 22, 25-26 had enormous trading volume of over 170 million shares each day.  But once the stock soared from $150 to $350, the volume fell by about half - Jan 27 was Wed, before trading restrictions were introduced.  Since Jan 26, volume has dropped every single day, often significantly.

crimp - I'm not familiar with a ladder attack, but it sounds like price manipulation designed to trigger sell orders.  Doesn't that leave hedge funds holding GME stock?  The hedge funds expect the price to fall back to normal valuations, so I don't get why they would want to buy GME.  But I could be wrong, as the price drops are accompanied by increases in volume - people are selling on the drops.

chasesfish - I can pretty much ignore the stock when it's trading near $300-$400, since my short calls are at a much higher price.  An even gutsier move might have been selling calls of shorter duration, like Feb 19 calls.  My approach has the disadvantage of "time value", where I might have to wait months for it to decay.

Rockies

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Re: GME deathwatch - how to profit?
« Reply #115 on: February 02, 2021, 09:04:24 AM »
Everyone can speculate on what to do, but this situation is unprecidented and crazy so no one really knows. I notice in the comments many people are speculating on what is happening behind the scenes but they all seem like guesses.

Maybe you should ask yourself - what would Charlie Munger do? He would stay the hell away and call the whole thing an "immoral cauldron of jackassery". Placing bets on either side of this is pretty stupid. But if this is your idea of fun - enjoy!

BigMoneyJim

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Re: GME deathwatch - how to profit?
« Reply #116 on: February 02, 2021, 09:27:37 AM »
Placing bets on either side of this is pretty stupid. But if this is your idea of fun - enjoy!

My tiny bit of GME is the most fun I've had in the market, ever.

That said, for all the attention I've been paying it, it's nothing to me. I adjusted my sell limits after lots of thought, and then offhandedly liquidated over 20x my stake in GME in other stocks ETFs because it was roughly time to re-up my cash cushion.

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #117 on: February 02, 2021, 09:32:14 AM »
Rockies - All investing involves risk, but look at my earlier posts on GME.  I talk about the stock price, the volume, and things you can verify.  Can you disprove something I said, using data?

The stock is not "crazy", it's responding to buying pressure.  With more shares being bought than sold, the price rises to match each buyer with a seller.  Today far more shares are being sold than bought, so the price plunges as the extra sellers search for buyers at lower prices.

Look at the highest strike prices for GME call options - any date will work.  They're down 75% in one trading day because the stock has dropped in half, from $225 to near $110-115 now.

When WSB applies buying pressure, they have to buy - to tie up their money.  That reduces the amount of money they have for the next attempt, and in the meantime the stock price has gone up.  So each attempt is also more expensive.  Will that continue indefinitely?

crimp

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Re: GME deathwatch - how to profit?
« Reply #118 on: February 02, 2021, 09:53:07 AM »
crimp - I'm not familiar with a ladder attack, but it sounds like price manipulation designed to trigger sell orders.  Doesn't that leave hedge funds holding GME stock?  The hedge funds expect the price to fall back to normal valuations, so I don't get why they would want to buy GME.  But I could be wrong, as the price drops are accompanied by increases in volume - people are selling on the drops.

I believe the premise is that the folks executing the attack want to buy shares at much lower prices, and that they execute this attack to cover either a new or existing short. If it's happening, it would seem intended to reduce confidence in the price among the retail investors that might otherwise replace the earlier entrants who have taken profit.

dignam

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Re: GME deathwatch - how to profit?
« Reply #119 on: February 02, 2021, 11:54:36 AM »
Placing bets on either side of this is pretty stupid. But if this is your idea of fun - enjoy!

My tiny bit of GME is the most fun I've had in the market, ever.

That said, for all the attention I've been paying it, it's nothing to me. I adjusted my sell limits after lots of thought, and then offhandedly liquidated over 20x my stake in GME in other stocks ETFs because it was roughly time to re-up my cash cushion.

So much this, it's been a blast watching this play out.

ChpBstrd

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Re: GME deathwatch - how to profit?
« Reply #120 on: February 02, 2021, 12:28:08 PM »
My broker locked me out of selling a bear call spread this morning because it's a "hard to borrow" stock, so the answer to "how to profit" was don't use TD Ameritrade, Interactive Brokers, or Robinhood. I also tried doing it with DDS - a lessor known short pump - and was denied.

At least I only wasted time trying to short the end of the squeeze instead of wasting money like the people going long into the squeeze. It's over now.

As a consolation prize I sold an XLE put for probably a 5% return by early March. Up $50, big whoop.

bacchi

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Re: GME deathwatch - how to profit?
« Reply #121 on: February 02, 2021, 12:43:21 PM »
My broker locked me out of selling a bear call spread this morning because it's a "hard to borrow" stock, so the answer to "how to profit" was don't use TD Ameritrade, Interactive Brokers, or Robinhood. I also tried doing it with DDS - a lessor known short pump - and was denied.

At least I only wasted time trying to short the end of the squeeze instead of wasting money like the people going long into the squeeze. It's over now.

As a consolation prize I sold an XLE put for probably a 5% return by early March. Up $50, big whoop.

I was able to open a 480/500 bear call spread at IB yesterday. I used the "complex options creator" tool or whatever it's called.

kenmoremmm

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Re: GME deathwatch - how to profit?
« Reply #122 on: February 02, 2021, 12:52:18 PM »
supposedly silver is the next one to get bid up to the moon?

https://www.youtube.com/watch?v=OjaG50BGcSo

dignam

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Re: GME deathwatch - how to profit?
« Reply #123 on: February 02, 2021, 01:19:33 PM »
My broker locked me out of selling a bear call spread this morning because it's a "hard to borrow" stock, so the answer to "how to profit" was don't use TD Ameritrade, Interactive Brokers, or Robinhood. I also tried doing it with DDS - a lessor known short pump - and was denied.

At least I only wasted time trying to short the end of the squeeze instead of wasting money like the people going long into the squeeze. It's over now.

As a consolation prize I sold an XLE put for probably a 5% return by early March. Up $50, big whoop.

I'm not convinced the squeeze has even started yet, given the amount of price manipulation going on (and amount of $800 call options traded compared to other strike prices).  Enough that I've left some of my shares long and will ride them to $1 if need be.

If I'm wrong, oh well.

Rockies

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Re: GME deathwatch - how to profit?
« Reply #124 on: February 02, 2021, 03:02:13 PM »
Rockies - All investing involves risk, but look at my earlier posts on GME.  I talk about the stock price, the volume, and things you can verify.  Can you disprove something I said, using data?

I cant disprove anything because I am not knowledgable about the subject nor have I ever executed any trade other than an ETF purchase for buy and hold. My opinion would be that in most cases even buying any single stock to hold it is a bit of a crazy and reckless move.  Index buy and hold is the way to go!

dignam

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Re: GME deathwatch - how to profit?
« Reply #125 on: February 02, 2021, 04:01:06 PM »
Rockies - All investing involves risk, but look at my earlier posts on GME.  I talk about the stock price, the volume, and things you can verify.  Can you disprove something I said, using data?

I cant disprove anything because I am not knowledgable about the subject nor have I ever executed any trade other than an ETF purchase for buy and hold. My opinion would be that in most cases even buying any single stock to hold it is a bit of a crazy and reckless move.  Index buy and hold is the way to go!

For long term, sure there's probably no one here arguing against that.  The vast majority of my portfolio is in index funds.  But I have a small pool of money that I play around with buying/selling stocks and options.  Money I don't really care much if I lose.  It's money I'm more willing to put toward far riskier plays (although, naked calls/puts is not one of them).  Who knows, I could get lucky and hit something big with it.  But it's such a small fraction of my NW that it won't make a huge difference if I miss.  The risk/reward is worth it for some plays.

It's not "stupid", it comes down to risk tolerance at the end.  Everyone has their own.

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #126 on: February 03, 2021, 12:02:16 AM »
Earlier someone called GameStop + Wall Street Bets a "freight train".  Since freight trains aren't known for going backwards at high speed, I think we need a new metaphor.

So what I propose as a metaphor is this:
"Into the valley of Death Rode the six hundred."

You have individual investors joining a cavalry, which gets stronger with numbers.  The threats and saber-rattling by WSB also fits.  Who are their opponents?  The literal and figurative big guns - Wall Street's hedge funds, high frequency traders, and institutional money.

For those who aren't familiar with The Charge of the Light Brigade, I'll quote it's most memorable lines:  "Theirs not to reason why, Theirs but to do and die."

swashbucklinstache

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Re: GME deathwatch - how to profit?
« Reply #127 on: February 03, 2021, 07:35:36 AM »
A wild guess on how to profit: if this ship does indeed go down, you might have a lot of first time stock market participants learning that harvesting losses is a thing for the first timeat tax time and selling near the very end of the year. Perhaps a play on that after things settle in the short term.

Financial.Velociraptor

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Re: GME deathwatch - how to profit?
« Reply #128 on: February 03, 2021, 08:12:04 AM »
I bought April puts at the 10 strike this morning.

hodedofome

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Re: GME deathwatch - how to profit?
« Reply #129 on: February 03, 2021, 09:05:57 AM »
I bought March BB $6 puts this morning as well.

trollwithamustache

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Re: GME deathwatch - how to profit?
« Reply #130 on: February 03, 2021, 09:43:16 AM »
I bought April puts at the 10 strike this morning.

Are you my guy!?! shorter term than your Aprils I sold some 10 puts. figuring GME has raised some cash and will settle back to where it was.

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #131 on: February 03, 2021, 09:54:17 AM »
I guessing I'll have to feel left out.. anyone here buy my GME $950 call options?
Because most of the near term options top out at $800 strike, I went out a year.

dignam

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Re: GME deathwatch - how to profit?
« Reply #132 on: February 03, 2021, 01:37:05 PM »
Also considering some April puts below $20 to hedge a bit.

ChpBstrd

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Re: GME deathwatch - how to profit?
« Reply #133 on: February 03, 2021, 01:58:35 PM »
I guessing I'll have to feel left out.. anyone here buy my GME $950 call options?
Because most of the near term options top out at $800 strike, I went out a year.

You'll have to watch that thing decay for a year.
Doesn't your broker require you to hold cash reserves or a margin balance too?

dignam

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Re: GME deathwatch - how to profit?
« Reply #134 on: February 03, 2021, 01:59:41 PM »
I guessing I'll have to feel left out.. anyone here buy my GME $950 call options?
Because most of the near term options top out at $800 strike, I went out a year.

You'll have to watch that thing decay for a year.
Doesn't your broker require you to hold cash reserves or a margin balance too?

I think he was the guy who said he could sell naked calls.

ChpBstrd

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Re: GME deathwatch - how to profit?
« Reply #135 on: February 05, 2021, 09:46:28 AM »
Welp, I wagered a late-model Civic on put options with a $40 breakeven by April. I'm also thinking about putting in a stink bid for a five figure bear spread - the bid/asks are all over the place.

There's a part of me that says there's never been a more obvious YOLO or an easier way to be retired by this summer, but then the other part of me offers reminders of pure-conviction big losses I've had in the past. Betting against stupidity has yielded masses losses for several years in a row now. I'm sure I'll contemplate these thoughts at work for the next 3 years.

v8rx7guy

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Re: GME deathwatch - how to profit?
« Reply #136 on: February 05, 2021, 09:52:29 AM »
Welp, I wagered a late-model Civic on put options with a $40 breakeven by April. I'm also thinking about putting in a stink bid for a five figure bear spread - the bid/asks are all over the place.

There's a part of me that says there's never been a more obvious YOLO or an easier way to be retired by this summer, but then the other part of me offers reminders of pure-conviction big losses I've had in the past. Betting against stupidity has yielded masses losses for several years in a row now. I'm sure I'll contemplate these thoughts at work for the next 3 years.

Can you explain to me in layman's terms what the stakes are for you?

ChpBstrd

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Re: GME deathwatch - how to profit?
« Reply #137 on: February 05, 2021, 10:08:51 AM »
Welp, I wagered a late-model Civic on put options with a $40 breakeven by April. I'm also thinking about putting in a stink bid for a five figure bear spread - the bid/asks are all over the place.

There's a part of me that says there's never been a more obvious YOLO or an easier way to be retired by this summer, but then the other part of me offers reminders of pure-conviction big losses I've had in the past. Betting against stupidity has yielded masses losses for several years in a row now. I'm sure I'll contemplate these thoughts at work for the next 3 years.

Can you explain to me in layman's terms what the stakes are for you?

A little less than a year of my life sold to the man. I'm considering wagering two or three.

v8rx7guy

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Re: GME deathwatch - how to profit?
« Reply #138 on: February 05, 2021, 10:12:29 AM »
Welp, I wagered a late-model Civic on put options with a $40 breakeven by April. I'm also thinking about putting in a stink bid for a five figure bear spread - the bid/asks are all over the place.

There's a part of me that says there's never been a more obvious YOLO or an easier way to be retired by this summer, but then the other part of me offers reminders of pure-conviction big losses I've had in the past. Betting against stupidity has yielded masses losses for several years in a row now. I'm sure I'll contemplate these thoughts at work for the next 3 years.

Can you explain to me in layman's terms what the stakes are for you?

A little less than a year of my life sold to the man. I'm considering wagering two or three.

But like, if the share price is over $40 on April 1, you lose your entire bet, under you double it?  Or is it like a sliding scale, or?

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #139 on: February 05, 2021, 10:22:02 AM »
I guessing I'll have to feel left out.. anyone here buy my GME $950 call options?
Because most of the near term options top out at $800 strike, I went out a year.
You'll have to watch that thing decay for a year.
Doesn't your broker require you to hold cash reserves or a margin balance too?
Technically, but not meaningfully.  Most of the price was an erroneous belief that WSB could push the price all the way past $1000/share.  As those beliefs fade, the options lose value (and buyers) dramatically.  So the options I sold Monday could be bought back for 5% of the price on Thursday, keeping 95% of the premium as profit.

When I look at other companies, their 1 year highest strike options are for 1.5x to 2x the company's current price, and trade for about 1% of the stock price.  With GameStop, 2x the price a year from now trade at 21% of the stock price.  Even the highest strikes (13x) traded at 10% earlier this morning (the last trade).

Once GameStop stock stops becoming interesting, the options prices will fall dramatically (like they did this week, so far).  Once the time value is decaying slowly each week, I'll probably cash out my gains.

dignam - Yes, I sold naked calls on Monday, but a small enough amount that I could afford to lose 4x the amount I invested.  Had GME reached $700-$850/share, my plan was to accept the loss and end the investment.

I predict the 2021 July call options at $800 strike will fall over the next 2 days.  Their bid-ask spread is $6.60 - $7.35 now, so you can at least sell them for $6.60.  I predict on Tuesday (Feb 9) you can buy them back for a much lower price.  This week GME shows they can't push the stock higher, so I view today as desperation from people who own high priced call options.

ChpBstrd

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Re: GME deathwatch - how to profit?
« Reply #140 on: February 05, 2021, 10:23:43 AM »
Welp, I wagered a late-model Civic on put options with a $40 breakeven by April. I'm also thinking about putting in a stink bid for a five figure bear spread - the bid/asks are all over the place.

There's a part of me that says there's never been a more obvious YOLO or an easier way to be retired by this summer, but then the other part of me offers reminders of pure-conviction big losses I've had in the past. Betting against stupidity has yielded masses losses for several years in a row now. I'm sure I'll contemplate these thoughts at work for the next 3 years.

Can you explain to me in layman's terms what the stakes are for you?

A little less than a year of my life sold to the man. I'm considering wagering two or three.

But like, if the share price is over $40 on April 1, you lose your entire bet, under you double it?  Or is it like a sliding scale, or?
Sorry I misspoke. It's March 12! And I rounded: my breakeven is exactly $38.69. These options are very expensive.

If GME is below $38.69 on March 12, I profit (strike price - price paid - future stock price). These specific numbers are (70-31.31-X) where x is the stock price. If X=30 for example, I will have earned 8.69 per share or 27.8%.
If GME is at $38.69 on March 12, I break even.
If GME is above $38.69 on March 12, I lose my entire $31.31/share, or the equivalent of rolling a nice used uninsured car off a cliff.

So far I'm up $500 on paper, so that's fun.

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #141 on: February 05, 2021, 10:38:41 AM »
ChpBstd - Looking at July options, the closest PUT to that is $125 strike PUT selling for $90, so a $35/sh breakeven.  At the old stock price of $20/sh, that's only +17% profit.  You limit the loss to 100% of that investment, which is a nice feature.

With naked $800 strike calls expiring in July, a $900 strike translates to a -1400% loss for the seller of the calls.  Do you find that risk too high?  Or do you think the time value will fade more slowly?

v8rx7guy

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Re: GME deathwatch - how to profit?
« Reply #142 on: February 05, 2021, 10:46:11 AM »
Welp, I wagered a late-model Civic on put options with a $40 breakeven by April. I'm also thinking about putting in a stink bid for a five figure bear spread - the bid/asks are all over the place.

There's a part of me that says there's never been a more obvious YOLO or an easier way to be retired by this summer, but then the other part of me offers reminders of pure-conviction big losses I've had in the past. Betting against stupidity has yielded masses losses for several years in a row now. I'm sure I'll contemplate these thoughts at work for the next 3 years.

Can you explain to me in layman's terms what the stakes are for you?

A little less than a year of my life sold to the man. I'm considering wagering two or three.

But like, if the share price is over $40 on April 1, you lose your entire bet, under you double it?  Or is it like a sliding scale, or?
Sorry I misspoke. It's March 12! And I rounded: my breakeven is exactly $38.69. These options are very expensive.

If GME is below $38.69 on March 12, I profit (strike price - price paid - future stock price). These specific numbers are (70-31.31-X) where x is the stock price. If X=30 for example, I will have earned 8.69 per share or 27.8%.
If GME is at $38.69 on March 12, I break even.
If GME is above $38.69 on March 12, I lose my entire $31.31/share, or the equivalent of rolling a nice used uninsured car off a cliff.

So far I'm up $500 on paper, so that's fun.

Thank you, that really helps!  I'm rooting for you.  Biggest concern is that Musk does something stupid and starts a twitter storm or something...

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #143 on: February 05, 2021, 10:48:15 AM »
I guess nobody is using my approach of selling calls at $800 strike, so I'll have to conduct the experiment.  I just sold one 2021 July call with an $800 strike for $6.00/share x 100 shares (total $600).

I predict these call options drop back to yesterday's price (!) of $3/sh, and I expect that to happen by Feb 10.  If the options are trading above $5/sh on Feb 10, I was wrong, and I'll wait to cover my position.


ChpBstrd

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Re: GME deathwatch - how to profit?
« Reply #144 on: February 05, 2021, 11:36:33 AM »
ChpBstd - Looking at July options, the closest PUT to that is $125 strike PUT selling for $90, so a $35/sh breakeven.  At the old stock price of $20/sh, that's only +17% profit.  You limit the loss to 100% of that investment, which is a nice feature.

With naked $800 strike calls expiring in July, a $900 strike translates to a -1400% loss for the seller of the calls.  Do you find that risk too high?  Or do you think the time value will fade more slowly?

I think the TV will fade with astonishing quickness, but the risk is being liquidated on a burp in the stock price.

At my broker and probably yours, the maintenance requirement for selling naked calls is the greater of the following 3 formulae:
     1. 20% of the underlying stock less the out of the money amount (if any), plus 100% of the current market value of the option
     2. Calls: 10% of current market value of the stock PLUS the premium value
         Puts: 10% of Exercise Value of the underlying stock PLUS the premium value
     3. $50 per contract plus 100 % of the premium

So right now that would be formula #2, which is 10% of $63 (at this moment price) + $6, or about $12.30. That's the amount of cash you have to set aside to earn the $6 return, but it also includes the $6 return, so really you're setting aside $6.30/sh of your portfolio for this trade. The implied 5-6 month return on your cash is 95%.

Suppose Elon Musk tweets a suggested partnership with GME to trade in old video game discs at TSLA dealerships, or maybe short interest again exceeds 100% and the WSB crowd gets riled up for round 2. The stonk goes back to $420, and you have to put up additional maintenance cash or be liquidated immediately. We'll assume formula #2 still applies. The 10% of $420 would be $42, and the premium value might rise to, let's say, $50. Now instead of setting aside $6.30/sh you've suddenly got to free up $92/share, a 14.3x increase in the cash you have on hand. You decide to make pancakes that morning instead of eating cereal, so you miss the notice from your panicked broker and get liquidated by the algorithm for a triple digit percentage loss, right at the top.

It's not likely, but that's how you lose 800% even after making the right long-term forecast on a naked call. Most likely this option will be worth a penny by May.

mizzourah2006

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Re: GME deathwatch - how to profit?
« Reply #145 on: February 05, 2021, 12:06:18 PM »
I guess nobody is using my approach of selling calls at $800 strike, so I'll have to conduct the experiment.  I just sold one 2021 July call with an $800 strike for $6.00/share x 100 shares (total $600).

I predict these call options drop back to yesterday's price (!) of $3/sh, and I expect that to happen by Feb 10.  If the options are trading above $5/sh on Feb 10, I was wrong, and I'll wait to cover my position.

Are they letting you sell those calls naked? Or do you still hold 100 shares? That's $80k to cover if it came to it, which it clearly won't.

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #146 on: February 05, 2021, 12:54:52 PM »
I'm using my account at IBKR, where I have lots of liquidity, especially compared to the call options I've sold.  Next time I open IBKR Trader Workstation, I'll look for it (in their "risk management" tool)

I agree WSB + fans pushed the stock to $420 once, but in my view they cannot do it again.  They GME having few sell orders, combined with cash to place buy orders.  Now, both are no longer true: they used their cash to buy call options and shares.  Hedge funds can rush in with short selling at $420/sh, meeting any buying demand (while profiting off the drop).  I think the conditions of 2 weeks ago are gone.

You're right to point out that if I didn't buy just 1 contract today, my risk of a margin call could be much greater.


I just sold one 2021 July call with an $800 strike for $6.00/share x 100 shares (total $600).

Are they letting you sell those calls naked? Or do you still hold 100 shares? That's $80k to cover if it came to it, which it clearly won't.
I applied for naked short selling of call options, and was (silently) approved.  In 2020 I bought lots of call options, which boosts my experience level, and maybe helped the decision to approve me.

If I sold an $800 strike call that expires today, and the stock was $801/sh, I really only need to come up with the difference.  The call option gives the holder the right (but not the obligation) to buy GME at $800/sh.  So to exercise the option, I have to be paid $800/share, or $80k.  I then need to provide $80.1k worth of stock, 100 shares of GME at $801/share.  (There's also cash-settled, more common in Europe, where I'd just pay $100)

bacchi

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Re: GME deathwatch - how to profit?
« Reply #147 on: February 05, 2021, 01:20:49 PM »
The margin requirement on the naked $800 call is only $1200 at IBKR. The risk is IBKR considers the risk to be pretty low.
« Last Edit: February 05, 2021, 01:23:30 PM by bacchi »

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #148 on: February 07, 2021, 06:44:31 AM »
bacchi - I really want to find that information, about the total margin for those positions.  When I searched, the closest I got was the "Risk Management" tool inside IBKR's Trader Workstation.  It said the "change" in margin was $1310 or so, but maybe I misread the field name.

ChpBstrd - Since the change in margin was $1300+, that suggests IBKR is locking up more than the $600 from the call option sale.  I can find my overall margin required, but that includes other investments I sold short (PUT options on Macy's and CCL, for example).

---
I read this week that people who bought PUTs on GME aren't getting as big a return as they might expect.  As GME's price falls, PUT options gain intrinsic value.  But volatility has fallen dramatically, so the time value has dropped dramatically.

I recall looking at 1 year PUT options on GME, at at the $500 level they cost just over $400-$10, breaking even in the $90-$100 range.  Right now those options are selling for about $455, roughly an increase of 10%... but this week, GME stock lost 80% of it's value.

Financial.Velociraptor

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Re: GME deathwatch - how to profit?
« Reply #149 on: February 07, 2021, 11:48:24 AM »
My GME long puts are down 28.5% since purchase on 2FEB2021.  I only bought a 1,000 bucks worth and intend to hold til the 16APR2021 expiry.  Breakeven at price of 8.95.

 

Wow, a phone plan for fifteen bucks!