![]() ![]() Eligible DreaMaker borrowers may also get $500 after completing a homebuying education course.Ĭhase also offers relationship discounts for eligible existing Chase customers in the form of reduced processing fees and lower rates. The DreaMaker mortgage, a low down payment option with flexible credit and income requirements, is geared toward buyers on a budget who might have lower credit scores. Closing out that risk by buying the underlying opens you to even more troubles if prices go back down.Chase is one of the top mortgage lenders because of its competitive interest rates, loan programs for borrowers with smaller down payments and relatively speedy closing times. While it’s generally easy money to profit from high IV, the strategy exposes you to unlimited losses. That will help close out losses if RKT stock sees a catastrophic fall (i.e., if the headquarters building burns down or massive fraud gets exposed). Investors looking to cover downside risk could even buy lower-priced puts. And given Rocket’s strong fundamentals, the firm’s chances of falling below $16 by next week is vanishingly small. Their implied volatility sits at over 2.0, making them abnormally pricey from a theoretical standpoint. ![]() $16 puts expiring next week currently sell for 10 cents per contract at the time of this writing. The easiest way to profit from high IV is by selling far out-of-the-money puts. Thank you, Reddit! It’s time to make some easy money. But some of it also comes from retail investors looking to either cash in or protect their gains.īut wily investors should sense an opportunity. Wall Street firms that believe RKT stock will eventually sink back to the $20 range will snap up put options faster than market makers can sell them. That far outstrips the 2.0 IV of call options. On Tuesday, implied volatility (IV) for RKT puts - a measure of put option prices - rose from 0.9 to 2.4. ![]() Today, it’s impossible to buy any option with a good strike for less than 60 cents.īut in the excitement, put options also get swept up. Fears of a GameStop repeat will have options sellers asking for ever-greater margins to cover the risk of a second spike. In theory, rocketing prices should only affect call options premiums. Things can go either way.īut there’s also a flip side - these price lurches make easy wins possible for regular investors. ![]() That’s why most market commentators will find themselves tongue-tied when advising Reddit investors whether to buy more $GME or other meme stocks. The r/WallStreetBets call options strategy is much like playing a high-payoff lottery: it’s excellent for betting small amounts of money, but many get addicted and end up gambling more than they can lose. For example, look at $30 AMC (NYSE: AMC) calls. But sometimes, the strategy can fall flat. Anyone buying GameStop (NYSE: GME) options during its first run-up could have become an overnight millionaire if they bought out-of-the-money calls with >$200 strike prices. As word spreads about early investors’ super-normal profits, others start jumping on the bandwagon, hoping that a delta-gamma squeeze will send shares even higher.ħ Warren Buffett Stocks Dishing Up Double-Digit Gains However, a problem happens when call-option winners start posting their gains online - something made possible by Reddit and other social media outlets. Prices for $34 3/5 RKT calls, for instance, jumped from 60 cents to $11.19 on Tuesday.Īny investor who put in $1,000 would have walked away with over $53,000. These low-cost bets ordinarily go to zero, but the occasional winner will bag their owners thousand-percent returns. (For the uninitiated, these are wagers that a stock will exceed a specific price before a certain date). Investors from r/WallStreetBets generally favor a relatively simple, yet highly effective weapon: out-of-the-money call options. RKT Stock: How to Play the Options Market Because with Wall Street focused on the next potential short-squeeze of the century, Reddit investors could be making easy money elsewhere instead. Instead, smart traders should look to the options market to make some money. The $30-35 range, after all, is still a handsome 40% premium to its original price. But as RKT’s market value declines back to $60 billion, should you buy the dip? Absolutely not. ![]()
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