FB earnings strangle

Discussion in 'Options' started by qlai, Oct 22, 2021.

  1. So... this "information" is from some sort of an advertising scheme? Hmm. I'm sure they'll only tell you what's true. :p

    If you actually "want" shares, then you buy them - or maybe just get a quick discount by selling ATM. Trying to get shares by selling puts is like waiting for your neighbor to get into an accident so you can buy his car cheaply.

    Speaking of "myth(s) fed to us"... try working your way through the mechanics of "shorting the hell out of stocks". Pretend that you're this mythical "hedge fund" that's got billions of dollars, and you can actually materially affect the price of a stock, then work out how you're going to make money by shorting a few hells. By the way, don't forget that other large players are in the market, that they can see large movements in the stock, and that they're not just going to sit there and watch you.

    (Honestly? I'm really surprised that you would buy into this kind of nonsense.)

    And yes, holding an appreciating resource - a stock of a major company in a growing economy - is "safer", in whatever sense it can be used at all in finance or risk management. You could even argue that it's safer than holding cash, with some justification.

    You wouldn't get assigned on a 350 call at 355; with that little of a distance between them, you'd simply roll further out for more credit. 30D/30 delta calls in FB are more than $20 from spot (324.20 vs. 345), and are priced about 6.50 right now; if the stock went up $5 by expiration, you'd simply grin, collect your money, and sell another call - because that small of a move wouldn't put you ITM. In fact, FB would have to go up to 370, or maybe 375 to put you in a position where you couldn't roll for a credit anymore, and where it would make sense to accept the assignment - and you'd be down about $2.5k when you did. Now we're going on just as I described: you're holding a loss plus 100 shares of short exposure (unlimited risk), plus taking on even more risk.

    I really doubt that you're getting the picture of what a bad position this is.

    No; you're misreading what I'm saying. Which isn't surprising, because your (incorrect) beliefs about what I'm saying are blinding you to what I'm actually saying. This is where reading comprehension is supposed to kick in: I don't expect your agreement, but I do expect that you'll try to understand what I wrote... and it seems we're not getting that far.

    In fact, my general thesis is about as plain-vanilla as it gets: the market (and the major stocks that compose most of its movement) spends most of its time fluctuating (and staying within 3SD more than 99% of the time, with occasional outliers that can be very large), with a long-term positive bias. I'm biased toward being long the market in general, but it's not a "heavy" bias, and does not ignore the fact that short-term movements can be MUCH larger than the long-term averages predict.
    #21     Oct 23, 2021
    newwurldmn likes this.
  2. Pray tell, good sir - what is a combo swap? Combos, I get - in fact, I have a couple of them on right now. But if it's not an interest rate swap, you've lost me. :)
    #22     Oct 23, 2021
  3. qlai


    Yeah I am not quite sure what is going on here, but you are starting to sound too condescending to continue.
    #23     Oct 23, 2021
  4. Overnight


    How is what you quoted a condescending statement by BWS? I do not need to know options to see that he is not being condescending.
    #24     Oct 23, 2021
  5. That's fine. You want to argue about things that you clearly don't understand, make baseless assertions about my perspectives instead of considering your own, and are unwilling or unable to comprehend what I wrote, so yeah - no point in going on. Good luck with your experiment.
    Last edited: Oct 23, 2021
    #25     Oct 23, 2021
  6. I suspect he's rather unhappy about being called on this "evil hedge funds" nonsense. I actually found it really funny, since anyone giving even a millisecond of thought to it would see the gaping chasm between the term "hedge fund" and them trying to cause extreme market movement... :D:D:D
    #26     Oct 23, 2021
  7. qlai


    That was not the condescending part. That was just something that I don’t understand - a 350 call is not ITM when stock is at 355? I don’t comprehend. Below is condescending:
    #27     Oct 23, 2021
  8. Overnight


    Sorry man, that is between you and he. If this were futures, I would know the lines and differences between comprehension and purposeful ignorance. But, as I have said many times before...

    You options guys are bat-shit crazy.
    #28     Oct 23, 2021
    qlai likes this.
  9. traider


    When you start seeing any financial instrument in Greeks, it's like Neo awakening in Matrix. Think about seeing 4D in a 3D world.
    #29     Oct 24, 2021
  10. qlai


    So what do you do with the shares afterwards?
    #30     Oct 24, 2021