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I personally would not touch options, just too risky for the money I earned through the years. I had a buddy who tried learning about options and dabbled and, at first, made some decent gains but eventually he got greedy and lost far more than he made so he no longer does it.
Me either. Plus, no matter how many times I read about it, I just don't quite get it and manage to get lost in the details. That's a clear signal to me to stay away from it.
I’m not sure it’s a better way, you have to be right, right on more than one thing and it’s time bound. Simply buying the stock is easier with less downside risk but also less upside
not only do you have to be right about picking the right stock , now you to to pick when too and have a time constraint
i leave any options and futures buying to the funds that specialize in it
Thank you,
That explanation is very helpful. I understand it now. It sounds like a better way to make money than just buying the stock. Paul Pelosi has more than likely been trading this way for years. That’s why they are so wealthy.
Donna
It's a better way to transform insider access to congressional information into massive multigenerational wealth. I would not agree that it is better than just buying the stock for normal people. It's worth remembering that options are zero sum; someone wins, someone loses. With plain vanilla stocks we can all win together. Every time you buy or sell an option there is a risk that Paul Pelosi (or another politically connected person, or industry insider, or hedge fund with a massive research budget) is on the other side of your trade.
It's a better way to transform insider access to congressional information into massive multigenerational wealth. I would not agree that it is better than just buying the stock for normal people. It's worth remembering that options are zero sum; someone wins, someone loses. With plain vanilla stocks we can all win together. Every time you buy or sell an option there is a risk that Paul Pelosi (or another politically connected person, or industry insider, or hedge fund with a massive research budget) is on the other side of your trade.
Good points.
Part of being an effective investor is knowing when not to mess with something, and recognizing (and embracing) reality like, "I'm merely average when it comes to investing, and that's on a good day!" That's certainly true for me. Average, at best. But buy on a schedule, hold, and ignore market crashes...that I've been able to do.
It's a better way to transform insider access to congressional information into massive multigenerational wealth. I would not agree that it is better than just buying the stock for normal people. It's worth remembering that options are zero sum; someone wins, someone loses. With plain vanilla stocks we can all win together. Every time you buy or sell an option there is a risk that Paul Pelosi (or another politically connected person, or industry insider, or hedge fund with a massive research budget) is on the other side of your trade.
Since they bought call options, what does that mean for Nvidia stock? They are betting it goes up I assume?
Me either. Plus, no matter how many times I read about it, I just don't quite get it and manage to get lost in the details. That's a clear signal to me to stay away from it.
When I hear people talking about iron condors and butterflies, I’m like okay this is getting a little too complicated for me.
Can you explain what Nancy Pelosi did when she bought Nvidia calls expiring in December 2024 for 120 a share? I don’t understand that.
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Originally Posted by ed06288
Not really, because I don't fully understand options that well myself. Soooo... she bought call options with a strike of $120.00. And she paid $373.00 a share. Sooooo 373 plus 120 = $493? So she would need the stock price to rise to $493 for them to start being profitable. I think.
You might want to read up a bit on stock options and the various types employed.
One popular model is the Black-Scholes Options Pricing Model, created by economists Fisher Black and Myron Scholes, which gives a theoretical estimate of the price of European-style options and shows that the option has a unique price given the risk of the security and its expected return. It has limitiations, and there are enhancements & extensions, but start here.
Many stock brokers' software allows you to get your feet wet with "paper trades" of options just so you can learn - you're not actually using money to buy & sell; instead, it is fake money with fake gains & fake losses just so you get the idea of how these things work.
They are not for everyone.
Last edited by moguldreamer; 01-03-2024 at 08:21 AM..
Since they bought call options, what does that mean for Nvidia stock?
Nothing. Remember, Nvidia is supply constrained. They have a gazillion orders with no manufacturing capacity to fulfill orders on a timely basis. They can accept more orders, but they don't have product to sell & ship, let alone book revenue.
Nvidia does not own or operate its own semiconductor fabrication factories called "fabs." It is one of many "fabless semiconductor companies" who rely upon someone else to build their products.
Nvidia is dependent upon contract manufacturers (mainly TSMC) to produce their chips. Nvidia is jockying with other fabless chip companies for something called "Wafer Starts." When TSMC starts up in the morning (metaphorically), they can start to manufacture a wafer for, say, Apple or AMD or Nvidia or IBM, among others. TSMC is running at capacity - they are building everything they can for their many customers. It takes a long time (months) from when they start manufacturing a wafer (with dozens of potential chips on it) until it is completed. So, each time they start a wafer for Apple is a time they do not start a wafer for Nvidia. (This is a deeply simplified and technically incorrect explanation, but I hope you get the idea of supply constraints among fabless tech companies).
TSMC and its competitors (UMC, SMC, Global Foundries, Intel, Samsung, others) are rushing to build new semiconductor fabs, but it takes years and tens of billions of dollars to build a fab and then ramp to production volume.
Quote:
Originally Posted by organic_donna
They are betting it goes up I assume?
Yes. They might be right. They might be wrong.
Last edited by moguldreamer; 01-03-2024 at 08:43 AM..
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