I just bought my first two contracts roughly two weeks ago and honestly I am disappointed in how I handled it. For context I have been a data analyst for 6 years and am starting my masters in data science this August.
Like many of you I saw the insane price volatility in Avis due to Pentwater using and abusing them and thought, there is no way Avis doesn’t come back down to earth. The only thing propping up the current share price is bulls looking for another squeeze from them (IMO) and I had jumped the gun and bought two put contracts ($100 6/18 and $100 8/21). My max risk is losing about $480 which I would not lose sleep over, but I am annoyed that I jumped the gun and didn’t do any research whatsoever, especially since it looks more like Avis will hold their current share price for much longer than I expected.
What to take away is what everyone says in here, do your research and jump in only if you can make a data-backed case for why you want to short or long it. I am at least content that I didn’t put an insane amount of money into this but it is wild to think that thanks to Robinhood’s popularity one of the riskiest forms of gambling (if you go in blind) is available to anyone and everyone. If I decide to do this again I am going to apply my background into researching what position I want to make.
Lesson for anyone wanting to jump in to options
byu/Jaso_peso inoptions
Posted by Jaso_peso
1 Comment
Options are also trades on vol, not just direction. You didn’t have to use options to do this type of trade. Granted, the amount of risk is capped vs going short the underlying. But option aren’t just instruments used for direction; they’re also trades on volatility. You should have some sort of understanding of the product you’re trading before you even decide to trade them.