I'm going to take $1,405.35 and turn it into $100,000 using stock options.

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Messypandas said:
wish i could understand this shit
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For those people that don’t understand what options are, here’s a quick lowdown of the basics:

What are Options?

An option is a right, but not an obligation to buy or sell something at a given price. Call options are the right to buy something, and put options are the right to sell something. These options expire.

If you have a call option, it’s worth money at expiry if the underlying (stock, bond, whatever) is worth more than your exercise price, because you can exercise (use) the option, buy the underlying cheaply and then sell it at a profit immediately. If you have a put option, it’s worth money if the underlying is worth less than the exercise price, because you can buy the underlying cheaply in the market then sell it at the higher put price. Everything else is based around this idea.

Example: Call option exercise price is 100, stock is worth 105. At expiry, it’s worth 5.
Example: Call option exercise price is 100, stock is worth 95. At expiry, it’s worth 0.
Example: Put option exercise price is 100, stock is worth 105. At expiry, it’s worth 0.
Example: Put option exercise price is 100, stock is worth 95. At expiry, it’s worth 5.

As you can see, these options have asymmetrical returns.

What About Before Expiry?

There are a few things that affect the price of an option. They are:

-Time until it expires (more is better, so the option slowly decreases in value as the expiry approaches)
-Price of the underlying relative to the exercise price
-The volatility of the price of the underlying (if the stock price is stable, then options are worth less because there is a reduced probability of big swings getting you a payout)
-The risk-free rate (what people can borrow at if they are zero-risk. People assume the market goes up on average at this rate, all else being equal, so a higher risk-free rate increases the value of calls and decreases the value of puts)

This means that for example if a stock increases slightly in value, this could actually make a call worth less if the market things the stock is now much less volatile, say after an earnings announcement.

The trading of options?

When you buy an option, you pay the option premium. This is a combination of the length of the option, the relative price of the option and the underlying, the stock’s volatility, the risk free rate and the market conditions. You will also pay a trading commission.

Options are Risky!

Buying naked options (options by themselves, without hedging them with anything) is extremely risky. Option prices are extremely volatile, and you can easily lose almost all your money very quickly (or make a lot!). Imagine this: you have a call option you spent five bucks on. The option is at-the-money, where the exericse price and the underlying price are equal (say 100 bucks). If the underlying goes up three bucks to 103, that’s a 3% increase, but the option will now be worth (possibly) 8 bucks, a 60% increase. Whoah.

What the OP Will have to Do.

To make a little money into a lot, the OP will have to make extremely risky bets on cheap options. You can buy out-of-the-money options for pennies or less, and if there’s a big unexpected swing in the underlying price, your options can go up many times in value. I once put a little money into RIM options a few years back, that they went up 2200% in three weeks. This is fairly crazy, because the risk is so high that you’ll lose everything almost no one does it without some serious math to try and offset the risk some other way.

Good luck OP!
 
9:30!

AndHereWeGo.gif
 
OP you are going to bankrupt so many people in this thread even though you have clearly and completely warned the shit out of them, haha.

Do NOT go blindly into investing, even after "reading up on it a little"--especially day-trading like this--unless you are totally playing with fuck-you money that would not hurt you in the slightest to lose. Because you're gonna lose it.
 
I completely, 100% state for a fact that if I made 100, 000 really fast, I would donate it to a "port Final Fantasy Type-0" fund.

That should be enough cash for them to justify the cost.
 
Good luck OP

Options seem to be good plays these days, since I think volatility will pick up. I'd be eyeing some puts, but I'm just the local market pessimist.
 
Jarmel said:
I would love to have a FAQ for this stuff as I want to start investing myself.
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There is a giant investment thread.

Kinda goes over my head hence why I setup the Investopedia game with monopoly money.

Oh, it also let me set it up with only a 1 minute market delay.
 
My friend and I tried trading options...once. I lost $650 real quick and he lost $6500. I'm sticking with good ole fashioned stock trading from now on.
 
I created a GAF 100k Challenge game on Investopedia but I'm not sure how to link to it other than having peoples email address that are interested.
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I found your game on investopedia, what's the password so I can join?
 
wanted to buy next weeks, but as I put in my order to match the $3.00 ask, by the time the order was complete, ask was at $5.90...no thanks (this is why I told people in PMs not to follow my trades, prices change too quickly, at least in these type of options)
 
Hmm I messed around with investing during my college year, made a couple of bucks but was scared to put most of my money that I worked for to pay for school in the market.

Good luck OP.
 
I might head out in a bit once my girl wakes up, we're both off today, but I'll be following on my phone and will trade through there if need be.
 
Stridone said:
Well it's the truth. If you want to earn money or learn something new, go do it instead of wishing for it on NeoGAF. The internet is full of all the information you need to get it done.
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I dunno man.


That goes outside my comfort zone and is teetering dangerously close to being productive.
 
This is soo interesting. I used to work at a large Financial Institute (Raymond James) Back in those days i had my head in stocks all day and I might risk something like this, but now I wouldn't know head from tail
 
Cool thread. I'll follow along for the ride. I've got about a grand in a really low yield CD that I'm anxious to put into something a little faster paced. Gonna take notes on this.
 
MVP said:
$7.95 + .75 per contract I believe, but I trust them. I've tried OptionsHouse which charges .15c per, but the trades act a little weird. It feels like they're slow with your trades and they jump in before you to eat a few pennies profit. It's weird but I don't like them.
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Who is your broker?
 
Can someone explain what this means? 775 strike? .90?
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As I understand it, that was a call option, or a buy option: It means that he owns the option to
purchase a set amount of shares of google, on the day that the option is expired, at $775/share, regardless of the market price. He paid $0.90 for those options.

Google currently is at Last [Tick] $758.045. So, say that option that he bought is two weeks long. That means that he's hoping google's share price will pass the $775 dollar mark within those two weeks. Say exactly two weeks from now, google is at 875. Therefore, the option is worth 100 dollars per share that it's good for, as the owner of the option can exercise it, allowing him to buy x shares of google at 775. As google would be currently worth 875, the owner then sells the shares at a profit.
 
rjc571 said:
If google goes above 775 by tomorrow then he gets teh moniez

*disclaimer: I knew nothing about option trading as of 10 minutes ago so this may be wrong
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well since he can't afford to actually buy 100 stocks of google @ 775 it's more about the expectation.
As the expectation rises that google will go above 775 tomorrow the call option will rise in value above 0.90

Selling this call option above 0.90 will get hem teh moniez.

*disclaimer: I also knew nothing about option trading as of 10 minutes ago so this may very well be wrong
 
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