Yup - the formula per contract is (width of the strike - $ paid) *100. In our example ($1 - 0.70) * 100 = 30 bucks. 20 contracts = 600 bucks
I was trying to logically replicate what might have happened with all the calcs
Robinhood sued by family of 20 year old suicide victim who thought he owed the company $730k
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In the latest episode of the United Hour Podcast, Nik @Rood and Imran @Annihilate Now! start with the good news by celebrating Manchester United Women's emphatic FA Cup win over Spurs at Wembley and the future of manager Marc Skinner.
Then it's the bad news and the ever worsening form of our Men with losses to Arsenal and Palace.
Finally the main debate - ETH Out now or keep him until the end of the season - if not longer. Are you Team Nik or Team Imran?
I was trying to logically replicate what might have happened with all the calcs
yup! Wall Street, the bankers and the 1% are basically the bookies of the world. They can’t lose. Everyone else is just a mug punter.
It’s a very good/clear explanation. I’m just terminally thick about stuff like this. No reflection on you!
Interesting he used the word "assigned" in his suicide note.
In options world, assignment means a very specific thing - the option buyer decided to exercise. The seller has to buy back the stock at a predetermined price. That's what the big red, negative number flashed in his screen.
If you're selling spreads (like I'm 99% sure he was) it shouldn't have meant anything because the long leg cancels the short and the trader is only concerned with spread width and premium paid.
It's a feckn sad story all around - and I hate RH, but I don't think this is something to really beat them down with. Just my 2 centavos.
In a very sad thread I got a good laugh out of this
That's like saying anything is life is a gamble. Cooking my food tonight is a gamble if my house will burn down.
Buying a single stock is not a gamble if you know how to read a very, very basic financials sheet and know what the company does. You can say risk but there is no business without risk unless it is some fixed interest from a bank or bonds.
Index funds aren't as great as people make them to me. When a crash happens many index funds crash with them. Stocks like Johnson and Johnson or Walmart do not. (though index funds grow a lot as well) Point is there is study, data and reasoning behind stocks 99.9% of the time. It is not a gamble.
The reason people think it's a gamble is because of silly folks investing in TSLA and GME then yeah you're making speculative plays and gambling.
No, it's not like saying anything is a gamble, we just have different views on what you and I are capable of in the stock market.
Forget that green exists for a second, if you pick a number or colour at random your expected winnings (losses) at the roulette table is equal. Luck decides where you actually end up. What I'm saying is that no matter what company you pick, given that it's big enough to actually be on an index, your expected profit is the same. Luck decides where you end up. Unlike with roulette you'll on average make money, because the market goes up on average. If you could just read a balance sheet and see who will beat the market then that means the rest of the market are all idiots, because if not they would have read that same balance sheet and driven the stock up.
When you say that many index funds crash but Johnson and Johnson do not, then that makes me suggest that you're confused about what an index fund is. Are you saying that Walmart's stock price doesn't fall when the market falls? Index funds follow the market exactly, that's the point of them. If an index fund crashes then the market has crashed.
I appreciate your insights here.
The guy just made bet A and then made bet B as an insurance by betting the opposite so that if A lost, B would come through. That's what happened, it's just that he needed to wait a day to see that B had come through and offset A. In that days period, he assumed the worst and tragically took his life.
Look at the graph. Walmart has never crashed in any of the crashed of the previous decades. That's not to say it never will but there is a reason it hasn't.
Again, the way you're defining the market as a gamble is how anything in life is a gamble. I could invest all my money on an education to later find no job. A very weak definition of a gamble. You can gamble on the markets but it is not inherently a big casino.
Luck does not decide, but as with anything in life luck does play a part. It's a game of risk. You can chase 50% returns and then play super high risk, and hope you get lucky or you can play super conservative at 6% growth and hope you don't get unlucky.
This idea that the market is a gamble is what makes people invest in GME like stocks since it's all a gamble anyway.
Ok, I'm looking. J&J orange, Walmart blue and S&P 500 grey. What do you see that I don't?
You're missing nothing. We had a crash in 2008. Walmart and johnson and johnson did not crash.
Extend the graph further to the crash of 2000 and before. Results .
That said even a stock "crashing" does not make it a gamble, especially long term.
Even if we went by any chosen sample size in your graph, if you dollar cost average in both those companies you make money.
These are slow and boring companies and you won't make a lot but you will make money. This ain't gambling.
You said index funds crashed while J&J and Walmart didn't. The index clearly didn't crash if those didn't.
Of course you make money, I said that all along. The stock market goes up on average, I believe like 7 % per year but I can't be bothered to check. We're talking about above market returns here.
Shorting isn’t a particularly complex concept, even though it’s inherently kinda dodgy in the mechanics of it.
Say I borrow an iPad off you that is worth £500. You agree to lend it to me for a few months.
I’m firmly of the view that next month that iPad is only gonna be worth £400, so I flog your iPad on eBay for £500 now, with the intention to buy a replacement once the price comes down.
A month later, if I’m proven right I buy another one for £400, and return “your” iPad to you, to make you whole.
I’ve made £100.
If the value of iPads inexplicably rockets and suddenly that same one is worth £1,000, I still need to return the one I borrowed from you, so I have no choice but to buy one on the open market.
I’ve lost £500.
Replace an iPad with a share, and multiply by the thousands/millions.
I get the concept. It’s the finer details that blow my mind. For example, there doesn’t have to be a specific date set in the future, right? I’m actually borrowing your iPad for an indeterminate period of time. Say I decide to short your iPad for £400 quid and the price drops sloooooooowly towards that, over a very long period of time. What happens then? When do I start to lose money? Do I never lose money if the price bounces around from £400-500 forever?
Replace iPad with shares, multiply by thousands/millions, throw in fees, diversify your portfolio and my head explodes.
My (admittedly limited) understanding is that it agrees what you and I (in this hypothetical) agree to, and in some circumstances you could ask for your “iPad” back at any time and leave me screwed and looking desperately for someone else to lend me one to bridge the gap.
Where I do get lost is how in the GME example they somehow went over 100%. That level is over my head for sure.
I definitely think it’s something that should be regulated, as the potential losses are hypothetically infinite.
Stay away from CFDs.
You'd normally pay a fee to the person you're borrowing from, so maybe you charge me $20 a month to borrow your iPad. This obviously means the longer my trade takes to come good, the more my profits are being eroded by my margin costs (your fee).
Also, if the price of iPads shot up suddenly, you might make me stump up more cash as a bit of insurance, so if I go bust you get something.
Then we agree it is not gambling at least?
Which index funds are you talking about though. If you wanna talk better than index funds just look at stocks like AMD or Micron. solid companies with solid financials. The increase in their stock price has nothing to do with some luck of going viral but company performance and profitability.
you short it at 400 or borrow at 400?
You borrow ipad. It's worth 400. You sell it right when you borrow it. In two weeks its worth 200. You buy one and give it back to me. You keep 200.
If it goes high, to 800 you now not only have to return 400 that you owe but 400 on top of it.
Now imagine there are 1000's of people like you who borrowed an iPad for 400. They see the price go to 600. then 800. then 1000. They're starting to get scared and realize this is going to go higher and higher and they can't afford to be owed more money, so they buy another ipad in the market (since the price is going up and might as well ride this wave to hedge your losses). Then everyone is buying iPads and iPad prices rocket high. This is called a short squeeze.
What do you mean what index funds? Index funds by definition follow the index. I asked you before if you were maybe getting mixed up about what an index fund is. An S&P 500 index follows the S&P, a global index fund follows a weighted average, etc.
AMD blue, Micron orange and S&P grey.
I said that if you threw a random dart you'd have the same expected profit as the index, but with larger variance. On average you'd beat the index 50 % of the time. You didn't throw a random dart, you handpicked four companies. Even then three out of four did worse.
Did this kid have a margin account? I'd like to know how he got one if he did. I have a margin available to me but it's nowhere near the amount he lost, and I reckon my credit and assets are better than his were.
Sorry but how the feck is somebody able to borrow money to play the stock market at 20. If anything, these ridiculous day trading apps should only allow direct cash deposits (ie - no credit transactions either through card or other means).
In that regard, if people wish to play the system, they can only play it with their own money that they actually have access to and control over. They should also be prevented from shorting or any other form of investment that can lead to actual financial liability.
In that regard, if people wish to play the system, they can only play it with their own money that they actually have access to and control over. They should also be prevented from shorting or any other form of investment that can lead to actual financial liability.
he didn't actually lose that much, it was just a glitch in the UI which displayed it that way
surely any adult can get a margin account if they put margin in, I don't see a problem with it personally, as long as people understand whatever they deposit can be lost