Option trading strategy reddit

I've tried a lot of strategies but selling naked puts out of the money on stocks I'd be happy owning is what makes the most sense to me. Basically mimicking limit.
Table of contents

• Reward and risk of options
• The GameStop stock frenzy, explained
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• Even Reddit is beginning to discuss the endgame for the wild GameStop ride - MarketWatch
• GameStop mania explained: How the Reddit retail trading crowd ran over Wall Street pros

We use cookies and other tracking technologies to improve your browsing experience on our site, show personalized content and targeted ads, analyze site traffic, and understand where our audiences come from. To learn more or opt-out, read our Cookie Policy. Regular investors are piling into the stock market for the rush.

Jennifer Chang got into investing in , but it was only during the pandemic that she started dealing in options trading, where the risk is higher, but so is the reward. Then during the day when it was like we had a really big drop, I lost everything I had made. The day we spoke, she was basically back where she started. She is not an anomaly. In recent months, the stock market has seen a boom in retail trading.

Online brokerages have reported a record number of new accounts and a big uptick in trading activity. And commission-free trading on gamified apps makes investing easy and appealing, even addicting. Traditionally, stock-trading has come with a fee, meaning if you wanted to buy or sell, you had to pay for each transaction. But companies like Robinhood have taken a jackhammer to that system by offering commission-free trading. Nathaniel Popper at the New York Times recently outlined how Robinhood makes money off of its customers, and more than other brokerages.

Robinhood, in particular, has become representative of the retail trading boom.

The platform, founded by Vlad Tenev and Baiju Bhatt in and launched in , says it has about 10 million approved customer accounts, many of whom are new to the market. The act of trading stocks was boring for a really long time, and even today, if you do it through Charles Schwab, it would seem boring. He does some trading for fun on Robinhood but does most of his investments through a financial adviser. Some people are able to resist the temptation, like Nate Brown, He got his first job out of college working in government tech and decided to try out investing.

But Brown seems more like the exception in this current cohort of day traders, not the rule. He says he worries about a new generation of traders getting addicted to the excitement.

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• Keith Gill Drove the GameStop Reddit Mania. He Talked to the Journal.?
• Keith Gill Drove the GameStop Reddit Mania. He Talked to the Journal. - WSJ.
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Some traders have become especially enticed by more complex maneuvers and vehicles. A big draw appears to be options trading , which gives traders the right to buy or sell shares of something in a certain period. People can use options to hedge their portfolios, but most of the traders I talked to were using them to make bets as to whether a stock would go up a call or go down a put and inject some extra adrenaline into the process.

He kicked about half of his stimulus check into Robinhood and is mainly trading options.

Reward and risk of options

Traditionally, investors have been told to read the Wall Street Journal and comb through corporate filings to make decisions. And they sometimes make decisions based on little information beyond seeing a stock ticker float by or seeing a recommendation or news flash from an anonymous person online. If you or anyone you know is considering suicide or self-harm, or is anxious, depressed, upset, or needs to talk, there are people who want to help:.

The National Suicide Prevention Lifeline : The Trevor Project : The animosity flows both ways. On Thursday, January 28, its price began to fall, and trading platforms such as Robinhood began to clamp down on the trading frenzy around this and other volatile stocks — a move that sparked fury among some traders. That evening, Robinhood announced it would reinstate limited trading on those stocks the next morning. GameStop is a video game retailer headquartered in Grapevine, Texas, that operates more than 5, stores.

Between malls dying out and the pandemic, if you forgot the company existed, that would be fair. GameStop has become a popular play among short sellers, who are basically investors who think a stock will go down.

Again, dying malls plus pandemic. You get the reasoning. Plus, GameStop has had a rocky history and faces a long-term threat from digital game downloads. Though the buying frenzy around GameStop hit in January, this one has been in the making for a while. Scion Asset Management, the hedge fund run by Michael Burry, who you might know from The Big Short , revealed he had a position in the company, which inspired some confidence, and then Ryan Cohen, the co-founder of the pet e-commerce company Chewy, disclosed last August that he had a big stake in GameStop.

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Earlier this month, he was added to its board. And they figured out a way that, if they acted all together, they could sort of screw the shorts over and make a profit doing it. Kochkodin points to a post from four months ago as an instigator. WallStreetBets has an antagonistic relationship with shorts — many retail traders are betting stocks will go up, not down. Lots of hedge funds and investors are shorting GameStop, but at the center of the current saga is Citron Research, which is run by famed short seller Andrew Left. Eventually, they got the video out , and the battle has continued.

When a hedge fund or investor shorts a stock , they basically speculate that its price will go down. They do that by borrowing, usually from a broker-dealer, shares of a stock that they think will lose value by a set date and then selling them at the market price. When you short a stock, you have to at some point buy back the shares you borrowed and return them. If the trade works, you buy them at a lower price and get to keep the difference. What happens with a short squeeze is that when the price of the stock being shorted starts to climb, it forces traders betting it will fall to buy it, to try to stem their losses.

The worst-case scenario is, theoretically, unlimited. Something started the ball rolling—the stock went up for some fundamental or emotional or whatever reason—and then the stock going up forced short sellers and options market makers to buy stock, which caused it to go up more, which caused them to buy more, etc. The shorts are definitely hurting: Melvin Capital Management, a hedge fund betting against GameStop, was down 15 percent in just the first three weeks of , according to the Wall Street Journal.

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