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<body> <p>Ok so a quick options guide, because since that high school kid had his run the level of options retardism has gone through the roof remained unchanged. So here is how to not blow up your account.</p> <p>For Long Options (Just don’t bother shorting options if you're reading this). Just follow this guide to maybe not completely waste your money.</p> <p><strong>Explanations:</strong></p> <p>Note: If a contract has a price of "$1.35" you pay $135/contract.</p> <table> <thead> <tr> <th>Thing</th> <th>Description</th> <th>Guidance</th> </tr> </thead> <tbody> <tr> <td>Delta</td> <td>Delta = 0.4 = For every $1 the underlying increases your options increases $0.4 = $40. Calls have (+) delta (increase in value when underlying goes up), puts have (-) delta (increase in price when underlying goes down)</td> <td>Delta < 0.3, probably avoid</td> </tr> <tr> <td>Theta</td> <td>Theta = -0.15 = your option contract decreases $0.15 every day = $15 per contract. Theta increases the closer to expiration, so weeklies lose value fast.</td> <td></td> </tr> <tr> <td>Implied Volatility (IV)</td> <td>High IV = More Expensive option</td> <td>Increases leading into earnings, drops after</td> </tr> <tr> <td>Volatility Crush</td> <td>IV Drops significantly after earnings making your options less valuable even if you guessed the direction right</td> <td></td> </tr> <tr> <td>Bid-Ask Spread</td> <td>Difference between bid price and ask price of the option</td> <td>Large spread = bad</td> </tr> <tr> <td>Expiry</td> <td>The contract is exercised after market close on this date. Call = you have the right to buy 100 shares at the call's strike. Put you have the right to sell @ the strike. Exercising usually costs a decent amount of money (~$30). If you're on here you can't afford either of these so don't worry about that.</td> <td></td> </tr> </tbody> </table> <p><strong>Strategy Guide</strong></p> <table> <thead> <tr> <th>Strategy</th> <th>Description</th> <th>Should I do it?</th> </tr> </thead> <tbody> <tr> <td>"Faggot's Delight"</td> <td>Weekly options (<5DTE) + Plan to hold a few nights + Out of the money (Delta <0.3)</td> <td>no</td> </tr> <tr> <td>Earnings Play</td> <td>Buy weekly Option w/ Delta > 0.45 the night of earnings</td> <td>ok</td> </tr> <tr> <td>Earnings Play</td> <td>Buying a Weekly ATM straddle (1 Call + 1 Put)</td> <td>No, you're not the first person to think of this. IV Crush will kill you</td> </tr> <tr> <td>It's the middle of the day and SPY is down 1.5%+</td> <td>You want to buy a weekly put</td> <td>No (99% of the time), The market will move against or stagnate and you will either sell at a loss or hold overnight and let theta get you.</td> </tr> <tr> <td>Shorting Calls / Puts</td> <td>-</td> <td>If you're learning from this guide, no</td> </tr> </tbody> </table> <p><strong>Pre Purchase Checklist:</strong></p> <p>If you check 2 or more things on this list, don't do it and save us the impending shitpost.</p> <table> <thead> <tr> <th></th> <th>Checklist</th> </tr> </thead> <tbody> <tr> <td>Is it a weekly? (<5 Days to Expiry)</td> <td></td> </tr> <tr> <td>Are Earnings this Week?</td> <td></td> </tr> <tr> <td>Does it involve Oil?</td> <td></td> </tr> <tr> <td>Is Delta <0.3</td> <td></td> </tr> <tr> <td>Is Implied Volatility > 200?</td> <td></td> </tr> <tr> <td>Is it what everyone else on WSB is doing?</td> <td></td> </tr> <tr> <td>Is the underlying <$20</td> <td></td> </tr> <tr> <td>Does it involve a short call/put?</td> <td></td> </tr> <tr> <td>Is the bid-ask spread > $0.15/contract</td> <td></td> </tr> </tbody> </table> <p>Edit:</p> <p>Some people have mentioned using vertical spreads. These are decent defined risk trades. The only issue with these are (without getting into the math) that you will often find that verticals don't become profitable until very close to the expiration date unless there is a huge move int eh underlying.</p> </body> </html>