Posted:
#1
Anyone have a link to information on buying put options and how they work? Or any advice on TSLA put options.
0
Put options.
Posted:
#5
Quote Originally Posted by Fire_Control:
Just looking for a safer way to short tesla. I feel it goes to 80 by January. If i buy a put option then sell it 2 weeks later am I obligated to do anything when the option expires?
Just looking for a safer way to short tesla. I feel it goes to 80 by January. If i buy a put option then sell it 2 weeks later am I obligated to do anything when the option expires?
No, you buy the put to open the position, you sell it to close the position, so once you have closed the position by selling then the transaction is completed and you are done.
Make sure you are careful with options..know what you are doing and buy properly. That means if TESLA is at 150 or whatever, dont go buy some 100 put option which expires in two months and expect to be successful. You should buy near or in the money and OUT in time. If you do not properly buy the option then you will lose for sure..maybe not in one transaction but you will lose it all longer term.
0
Posted:
#6
Hey Wall,
I always read your posts. You are telling me not to do exactly what i wanted to do. Is the reason you want to buy near the money liquidity?
If my idea of TSLA being 80 in January is correct buying a put option for 90 or so would be a winner i assume. Are you thinking the stock gets stuck in a range and I can't unload it.
Just trying to figure out a strategy.
Thanks.
I always read your posts. You are telling me not to do exactly what i wanted to do. Is the reason you want to buy near the money liquidity?
If my idea of TSLA being 80 in January is correct buying a put option for 90 or so would be a winner i assume. Are you thinking the stock gets stuck in a range and I can't unload it.
Just trying to figure out a strategy.
Thanks.
0
Posted:
#8
Quote Originally Posted by Fire_Control:
Hey Wall,
I always read your posts. You are telling me not to do exactly what i wanted to do. Is the reason you want to buy near the money liquidity?
If my idea of TSLA being 80 in January is correct buying a put option for 90 or so would be a winner i assume. Are you thinking the stock gets stuck in a range and I can't unload it.
Just trying to figure out a strategy.
Thanks.
Hey Wall,
I always read your posts. You are telling me not to do exactly what i wanted to do. Is the reason you want to buy near the money liquidity?
If my idea of TSLA being 80 in January is correct buying a put option for 90 or so would be a winner i assume. Are you thinking the stock gets stuck in a range and I can't unload it.
Just trying to figure out a strategy.
Thanks.
Well you have to understand the way options work and the risk you take with different strategies.
The further away from the price of the stock that you purchase an option, the higher the risk you are taking..in either direction. If you are buying a bullish call and purchase away from the stock or you are buying a bearish put and buy away from the price, both are the same..
For example if TSLA is trading at 150 and you are bullish, if you buy any option higher than 150 then you are buying ONLY risk, there is nothing intrinsic to the option..the value of the option is only the beta (risk) and the time premium. If you are bearish and you buy a put which is below the price of the stock then the same is true.
The most important aspects to buying an option is to purchase at or in the money and out as far as you can in time..time is your enemy with options, every day that goes forward, the less and less time you have and the premium for that time is drawn OUT of the option, even if the stock stays at the same price.
Ive traded options for I guess now 20 plus years and I've done it all..but what I learned from getting killed is that you must treat an option as a high risk gamble..but put the odds in your favor and go in the money and out in time.
For TSLA if I were bearish I would purchase at a min the June 140 puts, they are 20 bucks in the money and are out 7 months in time. It is not a glamorous trade but it gives you better odds to succeed, and you will not make a killing but you also are better positioned to not get killed.
Buying the Jan 90's is outright crazy..you are out of the money 30 points, the stock has to drop almost 30% for you to be in the money. If you were truly wanting to gamble on some Jan puts, why not go up to the 105's, that is moving up 15 bucks for only 300 more per contract. It is STILL out of the money and only gives you about 6 or so weeks but at least it isnt such a long long shot relative to the 90s.
I wouldnt trade the Jan's nor out of the money if it were me...
0
Posted:
#9
Wow. That was incredibly insightful. It would have taken me months and thousands of dollars to learn that much. 
So if i buy Jan 18 puts with a strike of 90 for 2.18 and the stock drops to 90 I stand to make a killing. But if the stock rises or stays the same i may have to sell for a loss before it expires.
The jan 105's makes more sense now that you bring it up because of resistance at 100.
If there any way to hedge options? ie buying the other side.
I assume you do this for a living. Much respect wallstreet.
Appreciate your time.
So if i buy Jan 18 puts with a strike of 90 for 2.18 and the stock drops to 90 I stand to make a killing. But if the stock rises or stays the same i may have to sell for a loss before it expires.
The jan 105's makes more sense now that you bring it up because of resistance at 100.
If there any way to hedge options? ie buying the other side.
I assume you do this for a living. Much respect wallstreet.
Appreciate your time.
0
Posted:
#21
Quote Originally Posted by Fire_Control:
Wallstreet,
Is buying a put and call option at the same strike a good idea.
Where tesla moves so much is this a valid strategy?
Wallstreet,
Is buying a put and call option at the same strike a good idea.
Where tesla moves so much is this a valid strategy?
That is a straddle..buying both a call and a put at the same strike price..
You have to overcome the beta baked into the option and know that if you buy a near term option and it is expiring soon, come earnings they will suck the premium right out of both positions..
0
Posted:
#25
Quote Originally Posted by wallstreetcappers:
No, you buy the put to open the position, you sell it to close the position, so once you have closed the position by selling then the transaction is completed and you are done.
Make sure you are careful with options..know what you are doing and buy properly. That means if TESLA is at 150 or whatever, dont go buy some 100 put option which expires in two months and expect to be successful. You should buy near or in the money and OUT in time. If you do not properly buy the option then you will lose for sure..maybe not in one transaction but you will lose it all longer term.
BINGO! This man just wrapped it up perfectly- Always pay the higher premium and stay in the money or darn near close.
By the way, here is a tip for you all-- someone went in and bought 5 million vix april calls strike price 22.
0
Hot Forum Topics
