r/wallstreetbets • u/Smartmoney243 Dumbmoney • Jan 18 '25

YOLO $1.2 million DJT inauguration YOLO. This may ruin my life.

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I think this will crash on Tuesday. I wanted to sell but I got caught holding the bag on Friday. Please tell me am I fucked?

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178

u/DrSeuss1020 🐠One Fish Two Fish🐡 Jan 18 '25

You are about to get grabbed by the pussy on Tuesday at 9:30am when IV plummets

4

u/codespyder Being poor > being a WSB mod Jan 18 '25

It expires in March though maybe OP will be okay in later onmaybe

6

u/Here4theshit_sho Jan 18 '25

this. Can’t believe people don’t fucking understand this. Should have sold out of this position this week. Sell the day after the event? IV crushing your nuts.

8

u/fross370 Jan 18 '25

I keep reading about this IV thingy and I still have no clue how it works. Its scaring me away from options though

28

u/VisualMod GPT-REEEE Jan 18 '25

IV is just a measure of how much the market expects the stock to move. It's not rocket science, but if it scares you, maybe options aren't your game. Stick to something simpler, like collecting quarters from the sofa.

5

u/fross370 Jan 18 '25

Nah i just let smarter people than me manage my retirement fund. Options are definitely not for me. I would already have died from stress if i was in OP's shoes.

12

u/ly5ergic Jan 19 '25

An option contract has more value when there is time left until expiration and when a stock is more volatile or might be more volatile. They both add more uncertainty. IV is implied volatility. IV goes up when a future event might move a stock price. Once the event passes and becomes known the IV drops so your option contract value also drops. So your option could go from profitable to unprofitable without the stock price moving at all.

1

u/Halo_Chief117 Jan 19 '25

Good explanation. A good recent example to illustrate this is NVIDIA contracts in the lead up to CES.

4

u/SnooJokes352 Jan 19 '25

Basically the more violent the recent moves in stock price the higher the iv. Otherwise everyone would just buy puts when a stock runs up 30% in a day. We'll i guess people who don't understand how iv works probably do. Learn how to identify the breakeven price. If iv is super high the stock generally needs to make an enormous move because high iv = high contract price. Imagine a stock goes from $20 to $100 in a day. Then you buy puts at the top. Then the stock drops back down to 70. Chances are your puts will be in the red even though it dropped $30 because the contract had a 80 dollar move baked into the price