Frankie for once I thought when you questioned by avoiding tails, you were talking about VS type of packers and not milf looking old hags…No pun intended but Amanda Lang maybe classy but is definately no good looking broad. Cheers.
Zesty is right on. Get it through your heads people, this isn’t some big institutional client with a big capital base and lines of credit. We’re talking about retail. There’s not a snowball’s chance in hell you can convince a retail broker to give you $1.25M buying power at 50X leverage with only $25k in cash. There’s not any institution that would take that risk without any other guarantees built into it. What happens if you lose all 1.25M? The brokerage has only your 25k and is holding the bag for the $1.225M in losses.
After reading further, realised that leverage can be only known for OTM after the trade is complete. In other words upto say my 3 months until strike is reached any fluctuations and it will be negligible… The key being I will be killed on premiumps and cost of call option contracts… If this is the case, how can I minimize it? Any good strategy for this. Much appreciated all and have a molly jolly turkey e-feast on TokenFatDude. Cheers all.
It’s clear that trollish threads will raise activity on AF. I think I’ll start a few.
how dare you?
Nm.
Also, Vegas is all or nothing; you either win it all or lose it all in Vegas. Options are different, i.e., your options will likely have some value before expiration and you can sell/buy to recoup some of your loses. Simply put, there is no sale before expiration in Vegas; you can’t throw a dice then try to sell your position to someone else when the dice is still rolling. You can with options.
How does one get Margin Call’d when you own a call option? Please explain. Btw what OP wants to do is what Cornwall Capital basically did…not sure why all the hate…
I don’t think this is a terrible idea. If you have a decent investment view, it can be profitable in theory. But I’m not quite clear what your overall investment case is - what exactly are you betting on to go up/down? What is the catalyst that will yield the outcome? Definitely interested in hearing your thoughts.
@adehbone, if you buy a call option on margin, let’s say 2:1, and the stock price goes to h*ll in a handbasket; you will get a margin call. Obviously, if you buy a call option with all cash then you have nothing to worry about.
Zesty what if I were to raise my capital to say 1 millon, is that enoug to get me 50:1 leverage…Ant recommendations on brokerages to approach with cost effective costs… I haven’t really understood what youoo told Adenhone but assuming I were to with even 2:1, can margin call be reached or will temporary fluctuations even going to bottom not matter. How can I cushion mysel from losing till my 31st march otm call option date is reached…Do I have to buy insurance for them thus eating into my potential profits… Is there a way I can let go buying insurance and getting this to reach certain call price come date time.
I suggest you read the “Big Short” by Lewis. Cornwall Capital did sort of what you are looking to do, finding cheap options to leverage up a “fundumental investment thesis”. If you plan do to a similar strategy like them you should not being going 50:1 or 200:1 leverage there is no point. You should be buying all the options with cash only. Margin buying on options for such a strategy is a stupid and risky strategy. I do not think you really know how much leverage options give you to begin with, there is no reason to go 500:1, 20:1 on the right call could make you a 500k or more easily.
@Token, if anyone could do 50:1, what would stop every wannabe trader like you from going to a brokerage with $10k, then purchasing $500k in options. If you win, you’re rich as the value of the options will be millions of dollars; if you lose, you declare bankruptcy and the brokerage is screwed never to get back the $490k they loaned you! This would be idiotic for a brokerage to allow such a thing. Do you understand? 50:1 is not going to happen, stop asking that question! In terms of how to cushion yourself from having a margin call occur before expiration if you are doing 2:1. The short answer is you can short sell a certain amount of stock or purchase index based short/ultra short ETFs. But this would greatly reduce your upside potential if a significant amount was spent doing this.
wow you people are still feeding the troll?
I’m surprised too they’re still feeding this idiot. I’m more surprised they don’t want to discuss classy reporter babes instead. Bunch of suspect individuals here.
So much for being an “idiot” huh. Isn’t BAC up 17% so far in 2012…Eat your hearts out suckers…To those who helped much appreciated and may you have a positive day ahead. Cheers all
Hey even if you made a 100% we still wouldnt reccommend it. You know why? because you probably wouldnt have been able to hold on to the position long enough to realise the gain. Like we said even a fraction of a percentage the wrong way and you’d be wiped. It wasn’t the idea itself, it was the method that was insane.
I don’t think this guy actually did what he said earlier in the thread.
Hope this guy was buying puts on C.
Check out Phil’s Stock World He runs a virtual $25k portfolio for members built out of futures and options.