Retired Investment Banker with the passion towards the markets. Stocks, options, verticals spreads, iron condors and all of those fun things. #thetagang🇺🇸🇨🇦
Joined September 2024
- Tweets489
- Following888
- Followers349
- Likes320
Pinned Tweet
If you don’t grasp options & greeks, you’re missing a core understanding of markets.
Comment below if you want the Excel file.
Here are 5 key points:
1) The Basics
An option gives you the right to buy or sell a stock at a predetermined price.
For instance, if a stock is trading at $10 and you hold a call option with a strike price of $12 and one year to expiration, that option has value.
But how much?
2) The Black-Scholes Equation
The Black-Scholes model offers the primary answer.
It accounts for two forces in an option's value:
Negative force: Time decay (Theta) decreases the option’s value.
Positive force: Stock price movement (convexity, combining Gamma, volatility, and price) increases the option's value.
The insight is that the negative impact of time decay must always balance out the positive impact of price convexity.
3) The Black-Scholes Formula
The formula provides an exact calculation of call/put option values by estimating the probability that the option ends up profitable and multiplying it by the difference between the expected stock value and the strike price.
This method aligns Black-Scholes with the expected value calculation.
4) The Greeks
The Greeks show how an option's value changes with various inputs:
Delta: Change in option value for a move in stock price.
Gamma: Change in Delta as the stock price shifts.
Vega: Change in option value for a 1% change in volatility.
Theta: Change in option value per day as time passes.
There are also higher-order Greeks, which capture more complex sensitivities.
5) Strategies, Extensions, and Limitations
Investors fall into two groups:
Those making directional bets on fundamentals or events.
Those trading against them, like market makers, vol traders, and more.
Options are versatile and are a metaphor for many financial strategies:
Credit investors and merger arbs sell puts.
Venture capital and biotech investors buy calls.
Though Black-Scholes and other models have their limitations, understanding how volatility interacts with time and market conditions is crucial.
As always, mastering the fundamentals, being clear on the math, and acknowledging limitations is key.
That’s it for now—drop a comment if you want the Excel.
😝🤣 those that follow, you know 💰
Alright enough is enough, opening $TSLA short here. Pcall and fire aim, along with squeeze firing exhaustion.
Shares short + married puts.
Goal to exit this trade is end of January/beginning of February.
Alright enough is enough, opening $TSLA short here. Pcall and fire aim, along with squeeze firing exhaustion.
Shares short + married puts.
Goal to exit this trade is end of January/beginning of February.
$UBER stock has outlived its utility and may have carved a multi year high at 85.
A 30 dollar stock and may be even 10 if Musk delivers the FSD by 2027.
Uber’s current price-to-earnings (P/E) ratio stands at 35.97, significantly above the market average. If investor sentiment turns bearish or growth decelerates, the P/E ratio could compress closer to industry norms (15-20), which would justify a lower stock price near $30.
Another successful trade and rolling the exp dates here and increasing strikes.
$SPX 6080/6090 call credit spread short term exp rolled into 6210 / 6220 for Dec.
Further details available in the discord.
discord.gg/nu6mT4n9ZF
7% max profit is expected on this trade.
✨
When we say something, we look at factual data + bring over 10 years of knowledge behind our shoulders.
Pin at $6000 on $SPX
#smart #stratgies #Optionselling #OptionsTrading #investing #fed #OptionFlow
Very predictable move we are seeing with $BTC
$COIN, $MSTR, $RIOT, $MARA, $HIVE, $HUT, $BTBT, $SI, $CAN, $ARBK, $SDIG, $BITF, $CLSK, $SOS, $NCTY, $BKKT, $GBTC, $ETHE, $BITO, $BTF
Short-term $BTC traders are watching for a reversal or stall just before $100,000.
Key levels like this often signal stalling or reversals, as larger institutions typically set sell orders just below such targets.
Short-term $BTC traders are watching for a reversal or stall just before $100,000.
Key levels like this often signal stalling or reversals, as larger institutions typically set sell orders just below such targets.
Mmm $NVDA er trade might be something like this
Unbalanced call butterfly
-Buy 1x 150 call exp Nov 22
-Sell 3x 155 calls exp Nov 22
-Buy 2x 160 calls exp Nov 22
Those that know, go check it out ;)
You’re welcome 🫡
$CRWD is very good candidate for a short below $320
But I wouldn’t enter short or long here.
Playing to the upside -> get a regular call butterfly for a pin at 400
Playing to the downside -> get a regular put butterfly for a pin at 300.
Nothing else is smart here.
A call butterfly is something like this
- Buy 1x 390 call
- Sell 2x 400 calls
- Buy 1x 410 call
So you’re targeting the 400 zone but reducing capital (risk) and significantly making risk : reward more attractive
$CRWD