* *

User

Welcome, Guest. Please login or register.

May 08, 2026, 10:20:45 AM

Login with username, password and session length

Recent

Stats

Members
  • Total Members: 142
  • Latest: Hal9000
Stats
  • Total Posts: 178902
  • Total Topics: 1490
  • Online Today: 365
  • Online Ever: 4316
  • (October 16, 2025, 04:40:42 PM)
Users Online
Users: 2
Guests: 161
Total: 163

« previous next »
Pages: [1] 2 3 ... 23   Go Down

Stonks

  • 344 Replies
  • 43303 Views

0 Members and 4 Guests are viewing this topic.

*

murphstahoe

  • *****
  • 8192
  • +1983/-142
    • View Profile
Stonks
« on: June 06, 2024, 11:44:36 PM »
Deserves it's own thread. Have a conceptual question for Q97...

Supposedly Keith Gill bought 120,000 contracts on Gamestop, which are basically deep in the money - because he announced a live stream.

Either someone has to buy back the contracts from him or they have to deliver shares. Let's say the people who wrote the contracts are like "screw it, here's your shares". If Gill doesn't have the cash to take the shares....

I guess he eventually has to blink and start selling his contracts, and the buyers can try to lowball him, knowing that he can't let them expire since he can't afford to buy the shares...

this is a really interesting case where "something" has a "price", stock has a price, the option has a price, but the price is really "last traded price" but cannot possibly scale to liquidate since there aren't enough buyers to absorb the current owner disposing of the item.
Logged
*

ILLove1997

  • *****
  • 6434
  • +80/-2019
    • View Profile
Re: Stonks
« Reply #1 on: June 07, 2024, 12:31:30 AM »
He bought the options so he is the owner of the contract.  He decides when to exercise or just close out (sell) the contract at the market price.

For every contract he bought there was a seller out there so they are the ones that are gonna get fucked with big negative returns.
Logged
----------------------------------------------------
Inaugural Official HQ2 Tempo AOTC Award Winner
2025 - Pot stirrer of the year
*

murphstahoe

  • *****
  • 8192
  • +1983/-142
    • View Profile
Re: Stonks
« Reply #2 on: June 07, 2024, 12:43:34 AM »
Quote from: ILLove1997 on June 07, 2024, 12:31:30 AM
He bought the options so he is the owner of the contract.  He decides when to exercise or just close out (sell) the contract at the market price.

For every contract he bought there was a seller out there so they are the ones that are gonna get fucked with big negative returns.

Understood.

Let's say the stock goes to 60. They have to deliver shares. What if they don't have the money...? I mean, you can say they are fucked, but that doesn't make money appear.

Reference: when the housing market went kaput in 2008, Burry, Reisman, etc.. had default swaps on the defaulting mortgage bonds, but AIG was in no position to pay them out at par. To realize profits they were selling CDS contracts at half or less of what the insurance contract would pay, to people willing to try to extract value from CDS contracts that had value at face but the guarantor was going bankrupt.

At some point, Gill might have options at 20, stock could be at 60, and he takes 10-20 bucks a share for the contracts to close his position to someone willing to go to court with the contract's seller.
Logged
*

ILLove1997

  • *****
  • 6434
  • +80/-2019
    • View Profile
Re: Stonks
« Reply #3 on: June 07, 2024, 10:22:33 AM »
Quote from: murphstahoe on June 07, 2024, 12:43:34 AM
Understood.

Let's say the stock goes to 60. They have to deliver shares. What if they don't have the money...? I mean, you can say they are fucked, but that doesn't make money appear.

Reference: when the housing market went kaput in 2008, Burry, Reisman, etc.. had default swaps on the defaulting mortgage bonds, but AIG was in no position to pay them out at par. To realize profits they were selling CDS contracts at half or less of what the insurance contract would pay, to people willing to try to extract value from CDS contracts that had value at face but the guarantor was going bankrupt.

At some point, Gill might have options at 20, stock could be at 60, and he takes 10-20 bucks a share for the contracts to close his position to someone willing to go to court with the contract's seller.

Hopefully those that are short calls are writing them covered (owning 100 shares of GME for every 1 option)

The folks that are short naked calls ( don't hold the underlying 100 shares per contract and extremely risky due to potential for unlimited loss) are more advanced investors and shouldn't be approved for that level unless that have substantial assets and trading experience

if Gill has 20 strike options and the stock is 60, at expiration or close to it, that option contract would be worth 40 bucks each

The OCC (Option Clearing Corporation) deals with all the execution and opening/closing of contracts

No way he'll get short changed due to the fact that if there's anyone out there that could acquire (in your example) 20 dollar strike options for 10-20 bucks when the underlying stock is 60 bucks, that would be a tasty arbitrage opportunity for everyone (able to acquire a stock for 40 bucks that's worth 60, instant 20 dollar per share profit!)
Logged
----------------------------------------------------
Inaugural Official HQ2 Tempo AOTC Award Winner
2025 - Pot stirrer of the year
*

murphstahoe

  • *****
  • 8192
  • +1983/-142
    • View Profile
Re: Stonks
« Reply #4 on: June 07, 2024, 10:42:20 AM »
Quote from: ILLove1997 on June 07, 2024, 10:22:33 AM
Hopefully those that are short calls are writing them covered (owning 100 shares of GME for every 1 option)

The folks that are short naked calls ( don't hold the underlying 100 shares per contract and extremely risky due to potential for unlimited loss) are more advanced investors and shouldn't be approved for that level unless that have substantial assets and trading experience

Counterpoint: Bear Stearns
Logged
*

murphstahoe

  • *****
  • 8192
  • +1983/-142
    • View Profile
Re: Stonks
« Reply #5 on: June 11, 2024, 05:34:59 PM »
Logged
*

ILLove1997

  • *****
  • 6434
  • +80/-2019
    • View Profile
Re: Stonks
« Reply #6 on: June 11, 2024, 06:44:00 PM »
Logged
----------------------------------------------------
Inaugural Official HQ2 Tempo AOTC Award Winner
2025 - Pot stirrer of the year
*

murphstahoe

  • *****
  • 8192
  • +1983/-142
    • View Profile
Re: Stonks
« Reply #7 on: June 12, 2024, 10:51:21 AM »
Quote from: ILLove1997 on June 11, 2024, 06:44:00 PM
Tell ya what if I had a hundred million of my own dollars I'd sure as shit retire while I could still enjoy it

Waiting until my son goes to college - there are some tangible benefits to having that green logo that filter down to him that money can't really buy, he got into a pretty nice camp at UIUC this summer in the EE/CS department. The company has some really good summer STEM programs for employee kids - in our labs playing with CUDA/AI programming, and that ends up on resumes. In the current environment, it's a pretty good name drop - I mean maybe that's not the straw that broke the camel's back but he has friends who did not get in.

And it's fun work, the company treats us very well, including with respect to PTO.

Been a wild ride.
Logged
*

ILLove1997

  • *****
  • 6434
  • +80/-2019
    • View Profile
Re: Stonks
« Reply #8 on: June 12, 2024, 11:01:45 AM »
Quote from: murphstahoe on June 12, 2024, 10:51:21 AM
Waiting until my son goes to college - there are some tangible benefits to having that green logo that filter down to him that money can't really buy, he got into a pretty nice camp at UIUC this summer in the EE/CS department. The company has some really good summer STEM programs for employee kids - in our labs playing with CUDA/AI programming, and that ends up on resumes. In the current environment, it's a pretty good name drop - I mean maybe that's not the straw that broke the camel's back but he has friends who did not get in.

And it's fun work, the company treats us very well, including with respect to PTO.

Been a wild ride.

Ah nice, are you trying to get your son into UIUC?
Logged
----------------------------------------------------
Inaugural Official HQ2 Tempo AOTC Award Winner
2025 - Pot stirrer of the year
*

murphstahoe

  • *****
  • 8192
  • +1983/-142
    • View Profile
Re: Stonks
« Reply #9 on: June 12, 2024, 11:17:17 AM »
Quote from: ILLove1997 on June 12, 2024, 11:01:45 AM
Ah nice, are you trying to get your son into UIUC?

well, he's only a Freshman...

Certainly he'll end up applying - I mean the only "trying" I can do is help him do good in High School. Can't buy your way in, and he's not gonna be an Underwood recruit

I were king I'd wish he'd get into and attend Cal-Berkeley, but that's equally crazy competitive as Illinois.
Logged
*

murphstahoe

  • *****
  • 8192
  • +1983/-142
    • View Profile
Re: Stonks
« Reply #10 on: June 18, 2024, 04:33:05 PM »
The

Most

Valuable

Company

In

The

World

And y'all wouldn't listen to your fellow alum
Logged
*

murphstahoe

  • *****
  • 8192
  • +1983/-142
    • View Profile
Re: Stonks
« Reply #11 on: July 17, 2024, 03:19:00 PM »
Nvidia down 8% today. CNBC blaming it on Trump rattling sabres for tariffs and china.

What will my MAGA relatives do? Trump is softening on abortion and crashing their stock portfolio. It's all fine and good in the cult until the pocketbook gets punished.
Logged
*

murphstahoe

  • *****
  • 8192
  • +1983/-142
    • View Profile
Re: Stonks
« Reply #12 on: July 31, 2024, 11:35:05 AM »
Logged
*

ILLove1997

  • *****
  • 6434
  • +80/-2019
    • View Profile
Re: Stonks
« Reply #13 on: July 31, 2024, 03:38:07 PM »
Logged
----------------------------------------------------
Inaugural Official HQ2 Tempo AOTC Award Winner
2025 - Pot stirrer of the year
*

murphstahoe

  • *****
  • 8192
  • +1983/-142
    • View Profile
Re: Stonks
« Reply #14 on: July 31, 2024, 03:47:21 PM »
Quote from: ILLove1997 on July 31, 2024, 03:38:07 PM
Almost as bad as Cathy Wood!

When will that nutter's 15 minutes end?
Logged
Pages: [1] 2 3 ... 23   Go Up
« previous next »