- Aug 4, 2000
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Indus
Lifer
- May 11, 2002
- 14,850
- 10,378
- 136
I want to say congrats.. I think but options confuse the hell out of me.. so I don't fully understand.
So if you have some time.. can you explain to me how what you did works?
You gambled that NVDA would go upto $113 by Jun 20 and when it did.. chaching?
That's a call option.. you make money on without even risking buying a share or selling one yourself.. just pick a price and put a call on it??
Am I getting it right?
JTsyo
Lifer
- Nov 18, 2007
- 11,984
- 1,102
- 126
Yea, you're betting it's going to go up. You pay a premium to place that bet. When it does go up the value of your bet goes up and you can sell it someone or you can execute it and buy those shares. Options are sold in sets of 100 stock so executing it requires some capital. But if you're wrong and the price doesn't go as high as you thought they you lose your premium and walk away with nothing.
- Jun 10, 2004
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It's a risky bet but you are ultimately risking only the call premium if you are wrong and the option expires worthless (e.g. doesn't finish above $113 on June 20). As long as you aren't on margin for your already leveraged bets like WSB types...
On the other hand, if you are correct, you are basically getting 100X leverage on gains (each options contract is for 100 shares). However, it could moon in the short run and you could be up 10000% but if it drops back below $113 prior to expiry you could still lose the entire premium you paid. So there is generally a point where most options players will realize profits early. I did also buy shares on the dip so it offers me additional opportunities including selling calls against shares (bearish, limits upside but provides downside protection through call premiums) or selling puts (bullish). You can quickly get yourself into trouble with options if you do not know what you are doing. You can be right about direction but if you are wrong about magnitude you can still lose.
The market was pricing in absurd levels of punitive tariffs (but still not worst case scenario) on an already beat down NVDA stock so I saw an opportunity for rapid reversal and was expecting something by the time of their next earnings report (which is why the expiry date is after earnings). And the strike price wasn't far off from pre-tariff price action.
Given we got a 90-day reprieve from a near worst-case scenario and the bond market action looks slightly less frightening now, ideally we have another great day tomorrow and I will exit my calls at a stupid gain. Because I don't like the volatility and don't plan on holding the options to expiry.
Chaotic42
Lifer
- Jun 15, 2001
- 34,438
- 1,619
- 126
I sold some silver today, so congrats if you own any - it'll be $150 tomorrow. 
Red Squirrel
No Lifer
I'm still hoarding my silver but damn it's tempting to sell! I have like 5k+ in silver at current prices.
Told myself I'm not selling until it goes up to $100 at least. Be a while before that happens but when it does it will be a hell of a cash out. Probably buy a nice toy with it like a tractor or something.
Told myself I'm not selling until it goes up to $100 at least. Be a while before that happens but when it does it will be a hell of a cash out. Probably buy a nice toy with it like a tractor or something.
- Aug 4, 2000
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You might want to see if the Hunt brothers are buying. 😉
I personally love silver and gold. I have a 1 oz silver Eagle I have well worn because it's mine. It's my lotto scratcher among other things.
Indus
Lifer
- May 11, 2002
- 14,850
- 10,378
- 136
dullard
Elite Member
- May 21, 2001
- 25,793
- 4,335
- 126
When I was early into my investing, I shorted silver using ETF-type funds, starting around spring of 2011. Bought and sold ZSL and DSLV a few times over the next couple of years. Eventually got a 10X return on a few grand (enough to buy a new car, which was quite nice shortly out of college to offload my old junker). I locked in 2/3rds of the gains on the last trading day of the year and let the rest ride. One the first trading day of the next year the value plunged, so much that I lost most of that remaining 1/3rd gain. I figured that I'd let it ride until I got some of that back (I was still up quite nicely overall).
It never did get back to where I wanted to sell again. It bounced around, with some okay peaks, but then it would plunge again. I just figured that I'd let it ride for years until I was back into profit territory. But then, ProShares decided to end the fund (DSLV). Without my wanting to sell, my shares were forced to be sold at a pretty bad price. I was still up that 2/3rds but I'm bitter about not being able to sell the remaining 1/3rd when I wanted to sell it. I no longer dabble in shorting nor with single-item ETFs. I just buy and hold mutual funds.
To answer your question: gold/silver ETFs are great until they aren't. You aren't in full control.
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- Aug 4, 2000
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No because of tax reasons. Without explaining too much, those are exchange traded trusts and the cost basis is not reported by your broker to the IRS along with stock and option trades. Don't ask me why as I think that's effing stupid. That includes options on these trusts.
As a result, all buy / sells have to reported on a per transaction or average basis on tax forms which is a pain in the ass. The only way that really works if you buy and hold until you think you have extracted maximum value.
Before tax laws changed you had to report all buy / sells on just Schedule D. From 1998 until 2010 or thereabouts it was an extreme royal pain in the ass. In 2008 I had a 25 page Schedule D.
I don't know if the law has been updated to include ETF trusts now but I avoid them like the plague. That includes oil partnerships like Energy Transfer partners and their bucking K2s. I hate K2s.
You sign a contract with someone (let's say for 100 dollars) that you have the option to buy from him (until June) 100 Nvidia stocks for 113 USD each. So, you give him 100 USD and now if the stock goes over 114 USD (113 per stock + the amount of money that you paid for the contract divided by the amount of stocks) you'd make a profit if you exercised the contract and the sold the stock immediately.
The person selling you the option will make 100 USD and also keep the stock if the contract is not exercised.
Most people, however, don't actually exercise the option as it requires a lot of capital to pay for the atocks. Instead, they usually sell the contract to someone else, instead of exercising it. In general, the more the stock is above (or close if under) to the contract price, the more you can get for it.
dullard
Elite Member
- May 21, 2001
- 25,793
- 4,335
- 126
Your point is correct. I do want to add though that as long as the buys and sells were in the same category (all short term or all long term of the same thing) then you can lump them together and put "various" for dates and "various" for prices on the Schedule D. That can make the number of pages submitted go down to one. You still have to prepare and keep all 25 pages of records of course. But what you put on the IRS forms can be simplified from what you did.
- Aug 4, 2000
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Well, after the tax law change where brokers were REQUIRED to aggregate your costs and proceeds to derive your net gain or loss and REQUIRED to report your cost basis, I have had 1 page forms for 14 years now even with hundreds or thousands of trades.
Prior to that you had to list every single buy and sell as the brokers forms were all "cost basis not reported". That is why I loved the change in the law. And thus began the use of Form 8949.
- Aug 4, 2000
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During the early stage roll out only stock trades reported. A few years later option trades cost basis was added in the same data.
Prior to the law change all they did was provide the raw data to the client who the had to demonstrate each gain or loss on each trade. It was a nightmare from hell.
Prior to the law change all they did was provide the raw data to the client who the had to demonstrate each gain or loss on each trade. It was a nightmare from hell.
biostud
Lifer
- Feb 27, 2003
- 19,580
- 6,647
- 136
dullard
Elite Member
- May 21, 2001
- 25,793
- 4,335
- 126
Yes, having the cost basis reported is a nice thing. But, even before it was required to be reported, you could still file a single page Schedule D. For example, here are the instructions from the year 1999. https://www.irs.gov/pub/irs-prior/i1040sd--1999.pdf
"If you sold a block of stock (or similar property) that was acquired through several different purchases, you may report the sale on one line and enter “VARIOUS” in column (b). However, you still must report the short-term gain or (loss) on the sale in Part I and the long-term gain or (loss) in Part II."
A 25 page schedule D was never required. You did have to keep track of everything yourself though, so the new required cost basis reporting is still helpful.
Entering "Various" on different IRS forms has saved me a lot of paperwork. For example, if you donate a bundle of items to Salvation Army bought at various locations on various dates, you don't need to report each date of acquisition. Or if you donate weekly to your church, you don't have to report each donation, just put "Various" as the donation date. Etc.
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- Aug 4, 2000
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^ My opinion on that ...and little faith and low opinion of the IRS said it was better to itemize than trust some dumbass kid to flag me for an audit which I could ill afford to risk or defend, thus a 25 page Schedule D.
Again, I thank the change in reporting law requirements. Put the burden on the broker to vouch for the accuracy of the numbers and not the taxpayer!
Again, I thank the change in reporting law requirements. Put the burden on the broker to vouch for the accuracy of the numbers and not the taxpayer!
biostud
Lifer
- Feb 27, 2003
- 19,580
- 6,647
- 136
Here in Denmark it's either the bank or the company/platform who has the depot for your stocks who are obliged to report everything to skat (our IRS) so we don't have to file anything, unless we don't use a Danish platform.
Red Squirrel
No Lifer
There's something about it, so shiny! I still want a 1 kilo or even 100 oz bar, but damn I think it's past that point now lol. Still a big chunk of money that I'd rather put on the credit line. Although when I buy silver I don't really think of it as spending, but more like, saving.
- Aug 4, 2000
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Brainonska511
Lifer
- Dec 10, 2005
- 27,634
- 12,044
- 136
They weren't "reciprocal". They're unilateral ones imposed by a giant manbaby who has economic ideas that are nearly 100 years out of date with regard to how things actually work today.
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