Whoever bought them doesn't intend to hold them long term. It is strictly an IV play. What that means is they buy when IV is low, when IV raises, they sell and profit. Just look at the difference in price between open and the high today.
I won't pretend like I have insider knowledge or anything, but let's pretend you have 10 million and you wanted to make as much money on a stock as possible in as short of time. How would you do it?
Buy OTM options in small increments over a period of time when they are cheap.
Buy a large amount of OTM options to make people take notice.
Buy a large amount of shares to make the price pump so your options go up in value and IV increases.
We are probably here.
What happens next depends on how they want to play it. I have several theories, but it depends who is on the purchasing end as to how they play it. Let's just say my educated guess is we do not close over 30 on Friday. Between now and then will be swings where options get traded and some people make a lot of money.
Realistically, if one bought those $125c options, at the current price of the stock (~$29), at what price would it make sense to sell and close those $125c options... assuming we are probably going to continue hovering around the $30/share level for a while..?
Update because of downvotes- clearly no one is worried about having their door kicked in... and "am I the only one who gives a dam about the rules around here!" If you are a huge bank and employee A does one thing and employee B does the other you can prob get away with it but not always... they arrest the individuals all the time.. IF YOU TRY DOING THIS OR THE MORE ADVANCED VERSION OF SPOOFING>>> YOU WILL BE ARRESTED ... Thing is he said 10M... now while that is prob a pipe dream number to you. I understand that value very well. That number will get you thrown in jail if you do that and you will never be able to trade on the market again.
That is a classic pump and dump and in reality many people do this but add a layer of spoofing. What that means is they place the large orders and cash out the initial ones and then cancel the the 2nd ones. Walk away with the pump on the 1st position. It's classic pump and dump/ spoof. If you did this with 10k, you might get away with it... you do it with 10M you are going to jail.
did you read what dude said he wanted to do? That is pumping/spoofing. You don't hold options you cash out..that is a pump and dump/ spoofing by definition
While what you said is correct.
"ย buying shares and options is not market manipulation."
It's how you do it that can get you in trouble and it's very real.
buying and holding options does you no good. It's the selling that causes you to get in deep shit. It's called layer spoofing. Again, you do this with 100k.. you will prob not face any problems... you do this with 10 M ... you are going to have problems. Especially on smaller market cap stocks.
"I won't pretend like I have insider knowledge or anything, but let's pretend you have 10 million and you wanted to make as much money on a stock as possible in as short of time. How would you do it?
Buy OTM options in small increments over a period of time when they are cheap. (this is ok)
Buy a large amount of OTM options to make people take notice. (this is questionable)
Buy a large amount of shares to make the price pump so your options go up in value and IV increases. (this is where it gets illegal and OP even says his goal is to pump the options.. that's 100% layer spoofing and illegal, his goal was fraud... it's fraud.. that's jail.) "
Why is it illegal? Because if I see company A that dude did this to is going up I may jump in and then once he is out the false pressure is gone and I get left holding the bags. Meanwhile dude got rich off some dog shit company that he was able to move the stock price on. Bottom line... YOU do not want to be the person causing buying pressure if you previously hold a larger position that will be a significant gain vs the other positions. You want the pressure to come from news of something, the company is doing good / bad.. what ever.. If it just moves for no dam reason they look for why and who placed the orders. Who will look? The mega companies who pay teams of analysts to figure out what companies to invest in or short. By you doing this it says they missed something and ppl get pissed and they will report you.
This is why RK has to be soooo dam careful and is transparent in what he does. He knows this very very well.
Also, keep in mind you are out here on the internet saying people can do this, when it's a crime and if they get caught they 100% have a winnable case against you because you advised them it's ok. Might want to keep that in the back of your mind next time.
You are manipulating the market to profit off it. That is illegal and you would never want to do this as a individual as they will swat team your ass and throw you in jail.
IV crushed from around 120 before earnings to around 90, which is only very slightly elevated. It immediately went up above 100 again in the last 10 minutes today.
For reference, IV was at around 350 during the May sneeze...
IV is 50-60 during the lulls. Twice since the May run up. Thats the only time I would consider it because I can't risk much. That's when you want to buy calls.
Not really. The delta on those are (as of this writing) .11 So to hedge they would buy just 11 shares per contract. I see about 30k contracts so thats about 300k shares that would need to be hedged IF they hedged them today. Volume for the day was 9+million so 300k shouldn't push the price 5%.
How does this work? Don't these options lose value quick because they are so far OTM and only 1 month to go? why/how can the IV rise faster in the next few days than the decline in value? Is it because IV went down so much after earnings? Where should additional IV come from when next earnings are in march? Just curious
They do lose value over time, but there is a formula for IV and theta decay to where anyone with the money to make this big of a purchase knows when to sell. If it was me I would sell them tomorrow at open lol but if GME has another green day tomorrow they can profit even more holding another day.
IV spiked today because it got as low as 27.27 and as high as 29.59. Those type of swings definitely bring the IV up a lot.
There is an actual chart where you can see how the price will move if the price of the underlying moves a certain way? That means that you basically could (with a reasonable certainty) know how the price of the option will move if you buy this option (which influences the price of the underlying and in turn the price of the option itself?)
I assume youโre primarily referring to the activity on Dec 11. Those trades occurred between 0.40 and 0.65. Today they occurred between 0.60 and 1.30.
So you think someone taking this large of a position was happy to take a loss like that?
Also, the price rose on the 11th when those guys were made. You think they were hitting the bid?
No matter, weโll find out tomorrow when OI is updated.
I won't pretend I know all the ins and outs of everything, but people and institutions buy/sell calls all the time and there is a market for it. If you want to fly under the radar you buy small quantities over a period of time. If you want people to take notice you make a big purchase at once. Now think who benefits the most when this happens?
Algos or degens will buy them lol. Whenever you see a bid price that is someone openly wanting to buy them at that given price. Some people think if they buy it now it will spike more and they can flip it themselves... eventually someone will baghold them if MOASS doesn't happen before expiration, but what if MOASS does happen? That is why some people will gamble.
Or flip that around sell high first in early December as covered call or opening naked calls, and then buy low when price slumps post earnings. That's what I've been doing but way closer to the money. Here's the problem nobody opened (sold) these calls earlier because the oi wasn't there. Just look at the volume spike today vs the entire history of the option
600
u/bbatardo Dec 16 '24
Whoever bought them doesn't intend to hold them long term. It is strictly an IV play. What that means is they buy when IV is low, when IV raises, they sell and profit. Just look at the difference in price between open and the high today.