Quote from Daal:
Shorting NQ puts could be a potentially interesting BEARISH and bullish play at the same time. If they halt this thing, the Nov 18 puts are likely to expire worthless (it takes quite a while for a stock to trade again), if the stock squeezes you bank. IV is off the charts
I'm considering this play
Worst case scenario is the stock goes to $0 by Nov 18 (super unlikely) and you lose, but that IV compensates you for that by quite a bit
Quote from Ghost of Cutten:
But expiring worthless during a halt doesn't mean you win - you would most likely be assigned long the stock from the strike price, because if they are still halted, the stock is probably worth zero.
You'd have to tie up capital for months in what is quite likely to be a total loss.
Quote from Daal:
I got Jan 2015 $30 PUT on TSLA. when this momentum squeeze insanity ends, stock might correct 30-50%, I hope to sell it higher rather than hold to expiration
Quote from Daal:
Not if the put is OTM by the time the halt happens.
Quote from jb514:
So what happens to the options if they halt NQ for a long period of time? I like the short put idea. I think the odds of a squeeze are decent and the vol looks pretty good
Quote from Ghost of Cutten:
Ok I don't want to come off as using hindsight bias here, but this clearly wasn't a fraud, or bankrupt stock, there was no insanity, and it was arguably not all that overhyped either (at least, no more hype than any high growth company with blue skies potential). It's a potentially revolutionary product that could bank enormous long-run profits, just like Ebay or Amazon or whatever.
Also, 'might' is never a reason to put on a trade. 'Probably will' is minimum.
If there's one thing I've learned in shorting, it's never try a long-term short in a hot stock with a hot product where the news flow and momentum are positive. No matter how crazy the valuation, it is just too easy for either i) you to be wrong, and the business really IS growing that fast ii) you to be right, but the gogo crowd send it up another 100%+ on pure BS anyway iii) you to be right, but your put expires worthless because the move doesn't happen in time, or happens from a much higher price. Those kinds of stocks are only worth buying puts on when the momentum has *clearly ended*; and really, it is best to wait for momentum to go into a clear downtrend - this has to happen for all big declines anyway.
Also, hype alone is just not enough odds in your favour. The best shorts are things where EVERYTHING is in your favour - the business is deteriorating significantly, not improving; where the momentum is negative, not positive; where the flow of news is likely to have negative shock after negative shock, not the reverse; where the management is dishonest, clueless, or helpless, not where it's run by one of the best entrepreneurs in the world. At least try to get 75% of factors before taking the risk.
In fact, although the valuation argument is obviously more favourable now, and the momentum has cooled off, I would not even look at shorting TSLA now up at 160. The next $50 is a coin flip.
Stick to slam dunks, like some of the other good trades you posted on this thread. When you have a proven method, it's important to stick to it rigorously, and not pollute the results or trading process with marginal trades decided on a whim, or for emotional reasons such as thinking the price is 'too high'.
Quote from Ghost of Cutten:
If the stock is halted with the put OTM, it is absolutely possible for you to get exercised. In fact, it is likely, because a halt implies that the stock is probably worthless.
If I were long $5 puts on a $7 stock that was under a fraud claud, and it got halted, I would strongly consider exercising some or all of my put position at expiry.
The total loss is the same as if you go long the stock, I wasn't talking about margin. I mean if you sell the $5 puts (for example) you risk losing $500 per contract if the halt re-opens at $0 and you got exercised by expiry.
Quote from Ghost of Cutten:
If the stock is halted with the put OTM, it is absolutely possible for you to get exercised. In fact, it is likely, because a halt implies that the stock is probably worthless.
If I were long $5 puts on a $7 stock that was under a fraud claud, and it got halted, I would strongly consider exercising some or all of my put position at expiry.
The total loss is the same as if you go long the stock, I wasn't talking about margin. I mean if you sell the $5 puts (for example) you risk losing $500 per contract if the halt re-opens at $0 and you got exercised by expiry.
I don't mean this is necessarily a bad trade, in fact it could be interesting - just that you must factor in the risk of halt + assignment to your risk calculations. It's basically taking downside risk in a stock that could well be worth zero, and hoping it won't blow up over the next 3 weeks. Maybe it works, maybe it doesn't.
Quote from Ghost of Cutten:
Ok I don't want to come off as using hindsight bias here, but this clearly wasn't a fraud, or bankrupt stock, there was no insanity, and it was arguably not all that overhyped either (at least, no more hype than any high growth company with blue skies potential). It's a potentially revolutionary product that could bank enormous long-run profits, just like Ebay or Amazon or whatever.
Also, 'might' is never a reason to put on a trade. 'Probably will' is minimum.
If there's one thing I've learned in shorting, it's never try a long-term short in a hot stock with a hot product where the news flow and momentum are positive. No matter how crazy the valuation, it is just too easy for either i) you to be wrong, and the business really IS growing that fast ii) you to be right, but the gogo crowd send it up another 100%+ on pure BS anyway iii) you to be right, but your put expires worthless because the move doesn't happen in time, or happens from a much higher price. Those kinds of stocks are only worth buying puts on when the momentum has *clearly ended*; and really, it is best to wait for momentum to go into a clear downtrend - this has to happen for all big declines anyway.
Also, hype alone is just not enough odds in your favour. The best shorts are things where EVERYTHING is in your favour - the business is deteriorating significantly, not improving; where the momentum is negative, not positive; where the flow of news is likely to have negative shock after negative shock, not the reverse; where the management is dishonest, clueless, or helpless, not where it's run by one of the best entrepreneurs in the world. At least try to get 75% of factors before taking the risk.
In fact, although the valuation argument is obviously more favourable now, and the momentum has cooled off, I would not even look at shorting TSLA now up at 160. The next $50 is a coin flip.
Stick to slam dunks, like some of the other good trades you posted on this thread. When you have a proven method, it's important to stick to it rigorously, and not pollute the results or trading process with marginal trades decided on a whim, or for emotional reasons such as thinking the price is 'too high'.