Check model above, he'd of have to of paid @30cents about $10 OTM a few days become expiry so already decayed like hell for this to of worked. Best case 50cents and bought the strike higher but doubt that would make the return.
The Reddit geek who raked in $100,000 with 2 trades is 'taking a small break'
- Thread starter trader99
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Check model above, he'd of have to of paid @30cents about $10 OTM a few days become expiry so already decayed like hell for this to of worked. Best case 50cents and bought the strike higher but doubt that would make the return.
I question how certain
But even so. With $766 he can only purchase a handful of puts.
I went to roku options just now for a hypothetical situation
Roku is trading at $129.25
Let's say I buy the $103 October 25th put , trading at .18 that would give me approximately 43 contracts. Those would have to skyrocket from .18 to over $12.00 ! Contract. I dont see how that was possible with roku falling about 20% that one particular day.
That's exactly what I was thinking as the decay would have already knocked those puts down a good 1/3 or even 1/2 before they popped.
That's expensive with only 6 days to go and $26 to drop just to get to Zero.
No way he'd of gotten $10 away for 30cents about as far away maybe tad nearer.
The hardest part is holding on the way up. But it's also the most profitable. .30 to $10. Not easy to not get out early.
$20+ wasn't it, maybe he only checked it once or twice got lucky, didn'tt watch and get scared out early.
Yes, return percentage and risk management are orthogonal. High returns imply lower risk management, higher risk management implies lower (but more consistent) returns. I'm notoriously risk adverse compared to many of my options trader friends. Except for last month, I've been able to pull away 1-2% profit on my account per month on the same money I started with. They, on the other hand, have blown out many accounts and made some incredible wins. I'm not the one buying everyone at the bar drinks at the end of the night, but I am the one that keeps the bar staff employed while the major risk takers are trying to get their money back from the market
.Yes, and this story is reflected in many accounts in Market Wizards. Many hedge fund guys caught a lucky break (most of them admitting they had no idea what they were doing at the time) and crushed it in a very soft market. There's nothing wrong with idolizing these people but their success must be taken with a grain of salt and seeking to achieve the same level is like trying to hit the 00 in roulette because some guy just drove off in a new maserati on his winnings. Its futile.
I'd like to rephrase this into a way that is more risk management friendly. "When you're up you can't long/short enough". I always get more when I'm winning, and I can't close my positions fast enough when I'm nearing my risk limit (~10% drawdown in 1 month). I made a recent post on risk management with gamma in this regard. I'm trying to learn how to manage stacking up on a large position and protecting myself from my risk to the other side. I'm no pro. Just a guy with too many opinions.
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Agree to have to have a mentality of letting winners run. But that dude clearly just got lucky. Will he from now on also continue to buy his lottery tickets? Because that was precisely what he had done. It's just we won't hear from him most likely again. He will just grind down his portfolio with his weekly 800 dollar lucky draw tickets.
By the way, yes it was incredibly poor risk management, risking 100% lost with a very high probability on each trade would get you fired right away at every hedge fund or sell side bank trading desk.
By the way, yes it was incredibly poor risk management, risking 100% lost with a very high probability on each trade would get you fired right away at every hedge fund or sell side bank trading desk.
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I just opened ThinkOrSwim (that I don't use except when looking at historical scenarios which you can do as well), and here is a screenshot showing that if you've spent $750 on 75x 127-strike $0.10 puts on Sept 16 2019 then on Sept 20 2019 you'd end up with $140K by end of the week.
This may be different than what he has done, and I'm not sure of his exact strike and entry/exit points.
Here is another scenario showing how someone could've turn $750 into $46K by buying 25x 127-strike puts for $.30 each the day before expiration:
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