TSLA
Tesla
-- 431.660 RGTI
Rigetti Computing
-- 17.0800 NVDA
NVIDIA
-- 137.010 PLTR
Palantir
-- 79.080 LAES
SEALSQ Corp
-- 9.080 
Why I don't recommend you buy single options, starting with NVDA and VFS.
$NVIDIA (NVDA.US)$ NVDA's recent trend has been fluctuating. Apart from the sharp ups and downs before and after earnings reports, just looking at the past few days, with minimal changes in implied volatility, the price fluctuating from 470 to 495 is common. Even though the increase from 470 to 495 is only 5.3% when compared, the price change of an option can reach 100% to 300%.
However, when buying call options, we need to consider many factors:
1. Time value. If you believe NVDA will reach 500 within two weeks, and you purchase its 500 20230915 call option, but if you guess wrong and NVDA even trades sideways at 495, this option will lose an average of $85 each day, eventually becoming worthless. Even if it eventually reaches above 500, the portion of your profit will still be affected by time value reduction.
2. Increased volatility. Taking today's trend as an example, NVDA's chart roughly forms a downward-opening parabola, ranging from 484 to 499 to 492. If you buy a large number of call options at 495, wait until it reaches 500 before selling instead of setting a stop loss, your loss will be today's time value added to the enlarged drop, resulting in a loss of 20% to 30% per option the next morning.
3. The risk-reward ratio is not good. You might say that buying options has limited maximum loss and unlimited maximum profit. However, in reality, encountering significant losses when selling options is not very common, while experiencing significant losses with buying options is common. Furthermore, since the options market is usually buyer-friendly, prices tend to rise, which is unfriendly to option buyers. Just as only a few people can capture soaring stocks, only a very small number of people can profit in the long term by buying options.
VFS $VinFast Auto (VFS.US)$ It is indeed a stock with a sharp rise. In a span of 10 days, the price changed from 9 to 91 to 42. Does it also look very similar to the trend characteristics of NVDA's options today? In fact, if you do not like small cap stocks, want to avoid excessive volatility, and hope that your account can steadily move upward, then you should also stay away from buying single options. If you have a high risk tolerance, are very confident in your own judgment, and want to leverage to increase profits, I would still recommend opening an options combination, such as the simplest bull spread call, which can greatly reduce the decay of time value.
In addition, when you consider buying options, the person selling you this option is most likely a market maker. Perhaps occasionally a gambler may luckily earn a large sum, but do not forget, the one who runs the casino always profits.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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魔群月光 : Options have to match mathematical models; the average person really can't figure it out.
TridentRodent OP 魔群月光 : A simple backtest is enough to explain the problem.
魔群月光 TridentRodent OP : To calculate the relationship between volatility and option prices, if the volatility is more expensive than the price, there is an opportunity
TridentRodent OP : The general approach is to compare implied volatility with historical volatility, but the market is changing rapidly. Former AMZN, now TSLA. It's important for retail investors to understand that some simple backtesting is paramount