Short-selling
02-03-2021
, 12:00 PM
02-04-2021
, 07:54 PM
Quote:
an interesting way to get short $GME for experienced traders only:
1) you don't want to short the stock, obviously,
2) Buying puts is hella expensive, so
What you do is sell a call spread, yes, simple, hey why are you telling me this, but wait there's more!
Let's say Feb 19 you sell the $350 otm call and buy the $450. You get paid ~20, your risk is $100, your net risk is 80. You have to have the collateral to do this trade as you are net short.
You're short expensive vol which is nice, long the time decay, and long gamma which is also nice and short delta. Fully collateralized trade, so you don't need to worry about margin requirements.
Stock is flat to down at expiry, keep the $20.
1) you don't want to short the stock, obviously,
2) Buying puts is hella expensive, so
What you do is sell a call spread, yes, simple, hey why are you telling me this, but wait there's more!
Let's say Feb 19 you sell the $350 otm call and buy the $450. You get paid ~20, your risk is $100, your net risk is 80. You have to have the collateral to do this trade as you are net short.
You're short expensive vol which is nice, long the time decay, and long gamma which is also nice and short delta. Fully collateralized trade, so you don't need to worry about margin requirements.
Stock is flat to down at expiry, keep the $20.
EZ $20/contract...unless you see it going back up to 350 and closing there in two weeks.
short vol worked [check]
+ev time decay [check]
long gamma [check, didn't impact trade]
02-04-2021
, 08:02 PM
04-21-2021
, 05:06 PM
