244
u/rain168 Trust Me Bro Jun 09 '23 edited Jun 10 '23
I watched and listened to the entire 4:21 video just to make sure he didn’t mention the trade strategy I executed this morning.
32
7
3
180
u/ByteTraveler Jun 09 '23
Notice he can’t stand still. A younger suntanned coke rat.
46
u/Shoryukitten_ Pretends to be married Jun 10 '23
Yeah, at first I thought mildly regarded but it’s just the coke.
8
u/BangkokPadang Jun 10 '23
Yeah, at first u/shoryukitten thought mildly regarded but it’s just the coke.
11
u/Shoryukitten_ Pretends to be married Jun 10 '23
Yeah, at first I thought mildly regarded but it’s just the coke.
-15
u/Shoryukitten_ Pretends to be married Jun 10 '23
Yeah, at first I thought mildly regarded but it’s just the coke.
124
u/bluen “bruhs 🤔” with a blue background Jun 10 '23
Why is Harry Potter asking stonk advice from Cramer?
20
u/RefrigeratorMean235 Jun 10 '23
That is John Oliver you twat
12
110
44
35
u/Daman26 Jun 09 '23
Can someone put this on a white board, I’m to regarded to follow
44
u/edhead Jun 10 '23 edited Jun 10 '23
He buys ITM calls that expire in 4 months (ITM by a few strikes, looking for big delta to get big movement from the $ in play). Waits for the stock to run up, then sells shares (not really selling naked short since he owns long itm calls). Short sale of shares generates cash and the broker makes you hold some as collateral, apparently if you're big enough you can talk the broker into splitting the interest on the cash, that's the rebate part James gets excited about. He also sells shorter-dated OTM calls (lol to your dumb ass) to pick up some sweet theta and cover the burn from his long calls, but only sells 1:2 for his ITM calls since he doesn't want to completely cap his upside if the stock runs up higher OTM than he though it would. When the stock tanks, he covers his short shares, and probably rolls his options. So it's a strategy that eventually leaves him long-short, and able to generate cash while stock trades within his range. Probably helps to be a hedge fund where you can manipulate the shit out of any individual stock too
6
4
u/Aggressive-Goose-594 Jun 10 '23
Biggest risk to Jim's strategy is the initial long option buy. He assumes that he wins the first one by catching a run up, and then plays this strategy to turn a winner into a bigger winner. Problem is when you buy itm calls and don't write any short calls to hedge. Can turn ugly quick
11
5
6
32
30
u/vinssent1 Jun 10 '23
Blah blah options blah blah momentum blah blah cap upside blah blah blah sniff sniff R.I.P
13
u/AutoModerator Jun 10 '23
Bagholder spotted.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
11
27
20
u/Ant0n61 Jun 10 '23
why doesn’t the other guy have a multi year running cable network show?
I’m intrigued
3
3
16
u/RMan48 Jun 10 '23
Who’s the other dude? He looks like what I imagine a young Eric Weinstein to look like..
9
16
u/Jaded_Economics7949 Jun 10 '23
What are they talking about when they mention the rebate?
16
3
u/Defenestration_Champ Jun 10 '23
rebate refers to a specific type of commission. Some brokers offer a rebate program where they provide a portion of the transaction cost back to the trader.
14
15
Jun 10 '23
I'm here to understand a quarter of this conversation. I understand nothing.....
15
u/mentalni_nered Jun 10 '23
I only understood Cramer doesn't like selling puts.
2
2
u/mazarax Jun 11 '23
Does he sell calls?
Because he said that selling puts is unlimited downside. That is not true: potential downside of selling puts is enormous, but only selling call options has infinite downside.
10
6
11
Jun 10 '23
Interviewer definitely cuts his own hair.... Or maybe his mom cuts it for him.
No barber in America would do that to a person.
14
u/Pengufen Jun 09 '23
Okay guys, time to transcribe this and do the opposite of everything he says.
8
u/IncomingAxofKindness Jun 10 '23
He definitely said he hates to cap his upside, so.... you know what to do.
11
4
u/woolfson Jun 10 '23
Seriously - I just listened and learned something nobody has never been able to explain , which is WHY people buy ITM puts or calls , it’s to take advantage of momentum or retail FOMO. I tried this yesterday buying ITM Carvana puts toward end of day and was stunned at the effectiveness . The closer to the stock price the more leverage, but deep ITM is pretty safe and you get less amplification of the up/down. But if I’m wrong here please someone explain why or how
8
u/Aggressive-Goose-594 Jun 10 '23
People buy itm options for the reason he stated: stock replacement. You can get 80% of the delta exposure for 50% the cost by buying itm long dte options
0
u/woolfson Jun 10 '23
Thank you for your reply. I appreciate it, I have been doing paper trading for about the last half year, with options, to try to understand their behaviors, and finally transitioned into the real world. It has been a good experience, thankfully I have the type of job that i can look over and watch the volatility and make changes, sometimes I make a bad trade, but I don't hold onto it hoping that it will turn around. I'm trying to also not get vested in the gains or losses, but just see this as an averaging, it's super hard to not become emotionally involved , but I'm getting there. I cringe every time someone posts a YOLO position in Reddit, when something far OTM, I don't need that sort of dopamine hit to remain happy and comfortable.
6
u/patrickswayzemullet Jun 10 '23
Here is the thing… i play ITM calls and puts all the time… it is not that you cannot lose money, it is that as a percentage you will mot lose 100%. It can be used as a FOMO for sure because .8 delta becomes .95 quick.
But if you are trying to get in and out quick, 1 OTM v 1 ITM, the OTM will win in % gained and less $ loss. You put in $200 and you get $100 that is 50% gain. ITM you put in $2000 and you win $200 that is 10% gain. Now if the stock drops below BEP hard, the ITM will probably lose 20% or 400… whereas the OTM guy realises 100% loss of $200… both have logic behind it if you are playing only 1-2.
What WSB does is going all in on these OTM. So they bought 10x $200 contracts. Now in that case when they dont profit yea the 10x will be zero.
0
u/woolfson Jun 10 '23
That really resonates with me, I have been trying to attenuate my process to only gain a few hundred bucks here and there, instead of the wild thousands that are possible, I still find myself tempted to do the near-out-of-money a few days before the expiring contract, but I hear that you're saying - lose the temptation and play safe. Won't always get an upside, but there's less of a downside, a more measured approach to managing risk with options. I see some of these YOLO approaches to distant OTM calls, and I realize how dangerous people are playing, I suspect most people just have their calls expire OTM. I had a really awful experience happen a few weeks ago, which took me by surprise. I had an OTM PUT option go ITM right before close, and I didn't close the position. The shares were assigned short, and then after market, the shares went up quite a bit. I had to buy-to-cover my short position, at a higher price point that was pretty painful. Taught me a good lesson. I also learned a tough lesson when holding ITM calls into the FRC earnings call; and holding PUTS through the Nordstrom (JWN) earnings call. Just dumb, it was the solid kick in the ass that I needed. Much more careful now, although i do have some near OTM calls in Intel (INTC) , because I know, as a technologist, that the boards that i design always have quite a bit of intel chips in them, even if I'm using another processor on the board. Intel sells a LOT of stuff, and they're integrated into every EE school in the country into the labs with components for kids to train on... so it's a diversified company. Or at least that's what I'm hoping. ;-)
0
u/patrickswayzemullet Jun 10 '23
You are confusing me, but neither is safe.
if SPX opens at 4000, 3950C is probably $6000 while 4020C is probably $200. If it hits 4025, you win more % in 4020C than with 3950C.
But if in a weird 1SD move down to 3940, your 4020C is at most at $200 loss, while the 3950C will lose $6000.
If you buy 1-2 contracts like this 4020C example, you are actually safer than buying 3950C. At most you lose $200, although that's 100% of your premium. When you buy 10x 4020C though that's when you can lose more.
So no if your take is OTM is less safe I will take this expensive ITM, that's not necessarily the right take.
-4
u/woolfson Jun 10 '23
You make perfect sense, as in perfect sense here. I don't need spectacular returns as I move toward a more measured and conservative set of approach to trading I'd rather lose 5% or 10%, or even 20% of something, than 100% of everything., and I think that what you've described is a much more disciplined approach. As I have at my disposal a rather large amount of computational capabilities as well as a very robust set of servers that most of the time are not doing anything (as in 90% of the time). And so I have been starting to build out models. I would like to keep in touch with you and ask you to review some of my proposed methodologies if that's ok, may I DM you?
4
4
3
u/patrickswayzemullet Jun 10 '23
This is just PMCC he bought ITM call and occasionally shorting the common stock, with delta hedging as opposed to just selling calls.
3
u/pyrodice Jun 10 '23
I need to ask chatGPT to invent a Jim Kramer speech making up shit on a Coke bender.
2
3
3
3
u/reddituser736985 Jun 11 '23
So I guess we just do coke and buy so many options it’s impossible to go tits up.
2
2
2
u/Excellent-External-7 Couldn't even get fired from Twitter Jun 10 '23
So Cramer runs the wheel, except instead of buying shares he controls the shares via a long call, right?
2
2
2
u/Thedaulilamahimself Jun 10 '23
Interest return on short common? Wtf is this guy talking about. You have to pay if you are short common?
1
2
4
u/lynkarion 🐸🍆 Jun 10 '23
Jim sounds like he got caught using Chat-GPT to do his economics essay and has to explain to the teacher what it's all about
4
u/Alarmed_Commission_9 Jun 10 '23
How the fuck does selling puts have “unlimited downside”?
1
u/Kobens Jun 10 '23
My monkey brain understanding of leverage trading, pertaining to your question:
- Going long: maximum you can lose is if the asset goes zero.
- Going short: there is no maximum price the asset could theoretically reach, so, there is no maximum loss for the short sellers.
2
u/Alarmed_Commission_9 Jun 10 '23
Yeah but you’re SELLING puts not buying them - you’re not actually short, it’s a synthetic long in essence.
If you sell puts, worst case scenario you’re making a deal to buy the stock at that price and getting paid a little bit up front for it
1
u/Kobens Jun 10 '23
Like I say, "monkey brain understanding" :) Thanks for enlightening me. I don't trade in stocks, looks like that's a good decision for me given I got that wrong.
1
-4
u/No-Intention156 Jun 09 '23
The other knows what he talking about. Cramer is just spewing a word salad.
18
32
u/dgnitty Jun 09 '23
It's pretty basic stuff what he's saying, understanding options in relation to underlying. To me, this is how I see and use options, all in connection with underlying. Anyone who is an options trader and thinks this is a word salad should stop trading immediately. Not saying you are an options trader. And no fan of cramer.
12
Jun 09 '23
Yeah this is the smarter way to trade then instead of gambling on 0dtes
14
u/kazkeb Jun 09 '23
Yeah, the fundamental purpose of options is to leverage or hedge an underlying position. People would have a lot more, consistent gains and sleep better at night if they understood the Greeks, logarithmic time decay, and the BSM model.
Then they could build positions that are almost delta/vega neutral, but "lean" in the direction of probability and/or take advantage of things like mis priced options due to severe IV skew (like we just saw on QQQ puts).
There are tons of small opportunities out there that are basically free money that a small trader can cash in on that large traders don't even look at. 1-2 million/year is monstrous for us, but fucking peanuts to large capital firms.
Then again, I'm probably just spewing word salad...
4
u/pw7090 Jun 10 '23
How do you make greater gains by buying insurance?
Also, what did we just see on QQQ puts?
8
u/kazkeb Jun 10 '23
Are you being rhetorical, or really asking?
Options aren't just insurance and can be sold as well as bought. He even talks about selling an OTM call off of his ITM call in the clip. Personally, there are very few times when I have a position that's theta negative.
Trying to explain IV skew and how to take advantage of it would probably take a lot more than I dare try to put in a comment.
1
u/pw7090 Jun 11 '23
Right, but that's just a debit spread, with the OTM call being insurance in case he's wrong.
And insurance eats into your profits. So how can you make more money by buying insurance?
1
u/kazkeb Jun 11 '23
How does the OTM call eat into profits? As he states in the clip, selling the call provides a source of income.
3
Jun 09 '23
Yeah exactly its a good hedge especially if you trade futures as well like if with opitons you can only loose the premium paid. But with futures you can loose more than you planned on
2
u/kazkeb Jun 09 '23
Do you trade much in futures? Forex too? Is it worth getting into? I haven't yet, butI'm really considering venturing into forex.
I do some light trading in crypto. There are a lot of things I don't like about it. But even though it is easily and often manipulated because of low liquidity and decentralized exchanges, I still feel like it's somewhat of a pure market, with things like 24 hour continuity.
I imagine that forex has most of the pros with none of the cons that crypto has. Plus, I think there are going to be some decent sized currency swings in the near future.
3
3
u/ChampagneWastedPanda Damn bitches be cray Jun 10 '23
Well here is some ADBE image salad to fill the gap
2
u/dgnitty Jun 10 '23
Well, I understand premium and decay which is mostly what you need to understand about options. The decay part is what kills a lot of people over the long run which is why on average I'm a net seller. Options is basically buying and selling time. And of course there's levering in-the-money, and if you don't understand your leverage and risk management then you deserve to lose it all. Not talking about you, just in general.
You also have to understand your more rare risks. When he's going short he's talking about boxing his positions and then catching downside. It's basically risk free. But what happens if your broker covers your short position for whatever reason or changes margin requirements when you're at your threshold. Not risk free anymore. And there's just tying up capital in short positions which counters your leverage. Risk management most important thing here, and a lot of beginners or even intermediate traders don't understand what can go wrong.
As far as Cramer, the most important part is that he takes risk first. That's the hard part and there is no free money in that. How many times has he employed this strategy and the underlying didn't pop. My guess lots of times, but he's not talking about that. . . . I doubt what you are saying about free money in the options market, arbitrage is constantly sniffed out by computers. But would love to hear a real life example. Cheers.
2
u/kazkeb Jun 10 '23
Yeah, I personally wouldn't use that strategy. Like you said, too much upfront risk for me. At minimum I would open it will half of the OTM calls sold upfront, then roll and double the amount if price hit them.
Admittedly, "free money" is an embellishment. There's not much out there that is free. Any algo trading scoops that up almost immediately. However, you can build somewhat complex option structures that have a really good risk/reward ratio. Small traders can take advantage because they deal in lower volume/contracts. It's possible to enter into these types of positions with 10k, 20k, and even more when dealing with highly liquid stuff, like SPY. Bigger guys can't really do this type of stuff because, with the minimum capital that they use to enter positions, they would run into liquidity issues and/or destroy the price curve.
5
1
u/Repulsive-Shallot-79 Jun 10 '23
Word.... makes sense to me.. the man's a public figure, just a human.. meanwhile over in Russia there are tactical nukes fixing to head to Belarus,and the war industrial complex here has fueled it.. puts on Raytheon.. leave that old mad money gambler in the not so bad box.
2
8
u/kazkeb Jun 10 '23
It looks like you're taking a bit of heat for that comment. To be fair, you kind of teed yourself up. Your first reaction might be to get pissed about it. It would be mine.
Instead of getting pissed though, go out and learn more about options and try to understand what he's saying... Not just the words, but the strategies behind them. If you do, I can almost guarantee that you'll become a better trader.
And that's the reason to be in this sub, right? To be a better trader.... (That and the fucking pure entertainment). Even though you're just some internet stranger, I hope that's what you can become.
10
3
3
u/EvlSteveDave Jun 10 '23
... the other guy just asks him questions and never really provides the audience with his strategies or even his analysis of Cramer's strategy.
Also, regardless of what you think of Cramer, (he's a dumbass, I know) what he's saying isn't "word salad" and it's kind of basic shit to some extent.
1
0
1
1
u/iPigman Jun 10 '23
I wish the presenter would shut up and let Jim speak unimpeded.
Awww dear Lard, never thought I'd say that.
1
1
u/sicha76 Jun 10 '23
This guy belongs on broadway, not cnbc. Brilliant comedian and doesn’t even know it
1
u/Coolizhious Jun 10 '23
how do i do the opposite of this
1
u/patrickswayzemullet Jun 10 '23
The opposite of a diagonal call is “sell longer-dated ITM calls (super high margin) and buy shortter-dated calls”, close before the longer date expiry.
2
1
1
1
1
u/Own-Acanthisitta582 Jun 10 '23
This is so complicated I don’t know how to to do the complete opposite to what he says
1
1
1
2
u/VisualMod GPT-REEEE Jun 09 '23