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PaperclipPerfector  2mo ago (text post)   2489 thread views

Friday Fun Thread for March 8, 2024

Be advised: this thread is not for serious in-depth discussion of weighty topics (we have a link for that), this thread is not for anything Culture War related. This thread is for Fun. You got jokes? Share 'em. You got silly questions? Ask 'em.

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So, I have this idea, and I'm curious if I'm on the right track.

I've generally avoided stock options, because the only thing I know about them is that's how you lose all your money. They expire worthless all the damned time. However, selling covered calls seems like a good way to be on the right side of that, and the only risk is you miss out on potential gains. You are literally selling contracts to people you are betting will be worthless by expiration, and pocketing the cash, and even when you are wrong, you still get the full value of the stocks you sold them at the price you agreed on in the contract.

I'm sitting on a shit ton of COIN, and I'm planning on selling half when it doubles. This actually coincides wonderfully with the size of an option contract (100 shares). So I'm thinking, every week I sell an option contract at my price target, pocket some extra cash I wouldn't have otherwise, and it eventually sells at that price just like I had pre-committed to do anyways.

It's win/win/win right?

I'm not super aware of finance, but my impression was that in general, you can't get higher returns in an efficient market without insider knowledge or higher risk. This would make me think that there's some type of drawback to your win-win-win (at least, in general, that wouldn't mean that it's not the best for you personally)?

Secondly, I think I heard that any financial instrument can be simulated using options.

I could be totally off base on either of those, so if people can correct me or confirm, that would we appreciated.

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