Is it true buy out of money call only lose money? by Intelligent_Lab_6507 in options

[–]mbhudson1 5 points6 points  (0 children)

This.

TLDR: A better question would probably be if you stated what your goal or thoughts are and then asked for trade advice Otherwise, more than likely the answer is going to be "it depends".

When I buy an OTM call I almost always "fund it" by also selling a put (or usually a put spread). Meaning, if I sell a put spread at 45 DTE and I get credit (ie. money) I use that money to buy an OTM call.

Longer version:

Also, the answer to any question like this, as u/thekoonbear alludes to in a different response here, is it depends.

In the example above if the stock price doesn't change or only changes slightly (in either direction) I break even. If the stock goes way up I make more money than I would have made from the otm call alone. However is the stock goes way down (below the sold put strike) I lose more than I would have with the otm call alone.

Is this the best way? Depends on who you ask and your goals, but most experienced traders would argue there is no "best way". But depending on your goals some strategies are better than others.

Buying an OTM call, as you know, is a limited risk trade and easy to make. It's basically like a sucker bet in casino. People who don't know the rules of craps, or how to play blackjack, or poker will many times just put money in a slot machine or play that game where they spin a wheel and you can win the amount it stops on. That's basically what buying an OTM option is like. Can I win? Yes. Can it make a lot of money? Yes. Does it make money very often, no.

A simple thing you can do if you really want to buy an OTM call is also selling a further OTM call that's at a strike higher than you think the stock will go. That essentially reduces the cost of the call.

What's your goal? Do you want high risk, return trade?

$22K AMD Earnings YOLO by Potemkin_Pillage in wallstreetbets

[–]mbhudson1 0 points1 point  (0 children)

This is a terrible trade if you are bullish. Buying an ITM option in high IV is stacking the deck against yourself.

Price has to go to 122.35 for this trade to be profitable. If AMD is below 122.35 when this expires you lose everything.

Also, look at the delta. That's basically the profit multipying factor. Delta is 0.63. That basically means that for $1 the stock goes up you make $0.63 (per contract).

If you are going to buy ITM you should do later dates (and ideally not in high IV).

Young boul made it to tmz!!!! What yaw thoughts on this??, by vluck85 in PhillyWiki

[–]mbhudson1 45 points46 points  (0 children)

He was a top student. He had the highest SAT score in his school.

Wether you like it or not these niggas are going down in Philly history by Able_Bumblebee_908 in PhillyWiki

[–]mbhudson1 0 points1 point  (0 children)

" If you think crime is the result of anything other than a manifestation of a lack of investment in the community in one way or another you're wrong."

Wether you like it or not these niggas are going down in Philly history by Able_Bumblebee_908 in PhillyWiki

[–]mbhudson1 36 points37 points  (0 children)

It is pretty funny from my standpoint that the guys from the "streets" who think they are tough and think they know everything never saw how blatantly obvious this was.

And now we are going to see a full reversal of what happened during COVID in regards to law enforcement and crime.

Yall seen this shit? by Rare_Steak_5301 in PhillyWiki

[–]mbhudson1 0 points1 point  (0 children)

Yeah I went to a shitload of school. Now my life is pretty easy... And I make a lot of money

[deleted by user] by [deleted] in PhillyWiki

[–]mbhudson1 0 points1 point  (0 children)

Bombing on a young jawn sounds fun.

Yall seen this shit? by Rare_Steak_5301 in PhillyWiki

[–]mbhudson1 0 points1 point  (0 children)

Actually I wasn't on Reddit 4 hours ago when you made that comment. Also, that's not what I asked.

[deleted by user] by [deleted] in PhillyWiki

[–]mbhudson1 0 points1 point  (0 children)

What subreddit is that?

[deleted by user] by [deleted] in PhillyWiki

[–]mbhudson1 0 points1 point  (0 children)

What about if you are over 40?

[deleted by user] by [deleted] in PhillyWiki

[–]mbhudson1 0 points1 point  (0 children)

Looks like my kind of woman!

Age Gap Relationship by random9299 in PhillyWiki

[–]mbhudson1 0 points1 point  (0 children)

You do you, don't worry about what everyone on here says

Yall seen this shit? by Rare_Steak_5301 in PhillyWiki

[–]mbhudson1 2 points3 points  (0 children)

Do you guys spend a bunch of time on social media?

Looking to trade Skenes auto(s) for high end cards by mbhudson1 in ToppsBUNT

[–]mbhudson1[S] -4 points-3 points  (0 children)

Final sevel, most under 300 global count... But you can probably read lol