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Started By
Message
re: Option prices on GME are wild---
Posted on 1/29/21 at 5:45 pm to Chucktown_Badger
Posted on 1/29/21 at 5:45 pm to Chucktown_Badger
It is crazy.
0
Posted on 1/29/21 at 5:46 pm to JDGTiger
I'm smart enough to know that I'm way too fricking stupid to trade options.
Posted on 1/29/21 at 5:46 pm to JDGTiger
You missed the part where I gave you examples of where someone could have placed a profitable trade on these puts expiring today without coming close to the strike price. The puts are worthless now that the market is closed, but they were worth something during the trading day and went from 35¢ to 75¢ in thirteen minutes this afternoon.
At 12:23 central, six minutes after you posted, the GME 29Jan 100 puts (the ones expiring today) traded in a range of 30¢-40¢. Let's say you purchased 10 contracts at 35¢, your cost would be $350 plus fees with GME trading at $323. Thirteen minutes later at 12:36 central, those puts traded as high as 75¢ with the stock at $275, then the options dipped down and then spiked to 79¢ at 12:53 central with GME at $277.
If you were able to get 70¢ for those puts which it traded above twice in the two examples, the puts doubled and GME was at least $175 away from the $100 strike price. So your profit would've been $350 or 100% gain in 13 minutes. You don't need a stock to go through the strike price to break even.
At 12:23 central, six minutes after you posted, the GME 29Jan 100 puts (the ones expiring today) traded in a range of 30¢-40¢. Let's say you purchased 10 contracts at 35¢, your cost would be $350 plus fees with GME trading at $323. Thirteen minutes later at 12:36 central, those puts traded as high as 75¢ with the stock at $275, then the options dipped down and then spiked to 79¢ at 12:53 central with GME at $277.
If you were able to get 70¢ for those puts which it traded above twice in the two examples, the puts doubled and GME was at least $175 away from the $100 strike price. So your profit would've been $350 or 100% gain in 13 minutes. You don't need a stock to go through the strike price to break even.
Posted on 1/29/21 at 5:52 pm to JDGTiger
quote:
Why would puts that far out of the money be worth anything the day of expiration? All unsettled today are expired and worthless now.
If you paid $350 for ten of them you might as well had thrown the money out the window.
What were the traders thinking? The options had lives of hours or even minutes.
IV mostly. I would guess most of those 0 dte were people swing trading them and getting out. Although there are actually some people who use them to hedge (shocking). 35 cents is really not that big of a price when you’re holding 100 plus shares of a stock that could drop to $50 or below in the blink of an eye.
Posted on 1/29/21 at 6:00 pm to Napoleon
People that held them into the close are going to be forced to exercise them.
Posted on 1/29/21 at 6:20 pm to JDGTiger
quote:
Why would puts that far out of the money be worth anything the day of expiration? All unsettled today are expired and worthless now.
If you paid $350 for ten of them you might as well had thrown the money out the window.
Some could have used those options as a hedge and others could've picked them up as a lotto ticket. Some of those were probably closing positions. I had a small lotto trade on NIO calls that I opened this morning and closed them when it started to work against me for a 75% loss. So they were closed.
The people that picked up NVAX 29Jan 170 calls right before the close yesterday for 50¢ with the stock at $134.00 ($36 out of the money) saw those calls go up at least 25 times that and more than 127 times that. The stock price did smash through the 170 strike price. Some lucky baws that picked up 10 contracts for 50¢ or $500 could've closed them for $64.00 or $64,000.00 by mid-morning.
When the NVAX was at 175.00 early in the morning, people were buying today's (29Jan) 200 calls for $3.00. Were they throwing their money out the window? Those calls got above $35.00 or $3,500.00 per contract. Almost 12 times what they were less than an hour later.
Posted on 1/29/21 at 6:58 pm to Chucktown_Badger
Might as well make money on the way up and then again on the way back down. I have a relative who bought 2/12 $29 Puts for $2.36 & sold at $10.30 this week
Posted on 1/30/21 at 12:23 am to htcthc321
quote:
Might as well make money on the way up and then again on the way back down. I have a relative who bought 2/12 $29 Puts for $2.36 & sold at $10.30 this week
How is that possible? I have a 2/19 $35 put and it hasn't been close to $10 this week.
Posted on 1/30/21 at 12:56 am to Chucktown_Badger
Posted on 1/30/21 at 8:21 am to tigerfan4444
It is the insane.
At the close you certainly needed the put in the money to have any value.
At the close you certainly needed the put in the money to have any value.
Posted on 1/30/21 at 8:22 am to eScott
That is not the case.
Why would anybody exercise out of the money options??
Why would anybody exercise out of the money options??
Posted on 1/30/21 at 9:35 am to eScott
quote:
People that held them into the close are going to be forced to exercise them.
no
Posted on 1/30/21 at 9:55 am to JDGTiger
If they still have value when they expire the broker will force it. You'll have a margin call on Monday.
I'm pretty sure if there's value to them, they'll be assigned. But I've never seen out of the money contracts expire with value. It's crazy.
I'm pretty sure if there's value to them, they'll be assigned. But I've never seen out of the money contracts expire with value. It's crazy.
This post was edited on 1/30/21 at 10:07 am
Posted on 1/30/21 at 12:08 pm to eScott
quote:
If they still have value when they expire the broker will force it. You'll have a margin call on Monday.
I'm pretty sure if there's value to them, they'll be assigned. But I've never seen out of the money contracts expire with value. It's crazy.
You guys are talking about the very thing that was confusing me for a while. If you initially BUY the call or put (meaning you have to pay for the transaction), you will not be forced to exercise anything. Either you offload the option for a profit, small loss, or full loss of the option price you paid initially.
If you initially SELL a call or put (meaning you get paid for the transaction), that is the situation where you could be forced to actually buy or sell shares at whatever the strike price is.
Someone smarter than me please confirm this, as I've seen this confusion a lot around the options discussions.
This post was edited on 1/30/21 at 12:09 pm
Posted on 1/30/21 at 12:13 pm to Chucktown_Badger
quote:It can simply expire worthless if it is out of the money and lose it all---you are correct.
If you initially BUY the call or put (meaning you have to pay for the transaction), you will not be forced to exercise anything. Either you offload the option for a profit, small loss, or full loss of the option price you paid initially.
quote:
If you initially SELL a call or put (meaning you get paid for the transaction), that is the situation where you could be forced to actually buy or sell shares at whatever the strike price is.
Correct--if you writing the option you are agreeing to either buy or sell 100 shares of the underlying stock at the strike price of the option anytime before the expiration of the option.
Posted on 1/30/21 at 1:17 pm to Chucktown_Badger
It doesn't matter weather you bought to open or sold to open. If you bought to open and those contacts expire OTM, they just expire and you lose 100%. If they expire ITM, then they will be assigned.
If you sold to open and they expire OTM then you collect 100%. If they expire ITM then they get assigned.
If you sold to open and they expire OTM then you collect 100%. If they expire ITM then they get assigned.
Posted on 1/30/21 at 1:30 pm to eScott
quote:
If you bought to open and those contacts expire OTM, they just expire and you lose 100%. If they expire ITM, then they will be assigned.
Now you're confusing me again because everything I read said that if you are buying the option you are not obligated to do anything. But now you're telling me that if I buy a put that is ITM at expiry they're going to force me to buy the stock so i can sell it?
This post was edited on 1/30/21 at 1:31 pm
Posted on 1/30/21 at 1:36 pm to Chucktown_Badger
That's correct.
This post was edited on 1/30/21 at 2:01 pm
Posted on 1/30/21 at 2:09 pm to eScott
quote:
Say you sell a $10 put on AG and it pulls back to $12 before options expiration, I'd just exercise that option and own the stock.
If you sell a put, you don't have any exercise/assignment rights. It's the put buyer who has exercise/assignment rights.
If the stock happened to be at $9.99 at the close, and the put seller hadn't closed the position, the stock would automatically be assigned to him.
But if you owned a $10 call and the stock closed at $12 (or $10.01), then what you're saying would be true. You could execute an assignment at $10 in that case.
Posted on 1/30/21 at 2:18 pm to eScott
quote:
That's correct.
And assuming i have the funds to cover that the buy and sell would happen automatically and instantly?
This post was edited on 1/30/21 at 2:19 pm
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