Posted by DigiNomad on 26th of Jul 2024 at 03:14 pm
Steveo - I'm not good at it the actual measurement...the theory
mostly gets me done...but there are a few good sources on X you
should check out.
The thing that works for me is simply looking at an options
chain and putting myself in the position of the dealer. If I'm
selling a crap ton of out of the money calls, I might think the
buyers are morons, but I have to buy the stock to hedge in case
they just happen to be right. If I'm selling them 10 delta calls, I
have to buy 10 shares to neutralize and just pocket fee...and then
I have to buy more as price / delta rises.
The calls far outweigh the aug options....but very few on the
OTM options, which is what one looks at to anticipate Gamma
Squeeze? Why would the market makers let themselves get
played like that?
Posted by DigiNomad on 26th of Jul 2024 at 03:17 pm
They get paid to make markets. They are fine with neutral.
Lots of transaction fees.
But yes, the degens figured out how to play them...and now
the big boys have joined in on the larger names. I'm sure
there are super computers keeping the dealers neutral.
Posted by DigiNomad on 26th of Jul 2024 at 03:29 pm
It's the same question people should ask themselves about real
estate. If it's such a great investment, why do the banks loan me
the money for a measly APR when they could just buy it themselves
and get in on the good stuff? There's nothing preventing
them and they have a duty to shareholders. Well, it's because
they are typically on the right side of the real estate trade over
the long term. In other words, RE is not the panacea
investment it's cracked up to be...not by a long shot. If I was
wrong about that, I promise the banks would be in on the buy side
of the trade.
Posted by tmladucky on 26th of Jul 2024 at 04:01 pm
I agree with you - banks don’t want to pay the taxes, do
maintenance, pay utilities or special assessments, insurance, HOA
fees, etc. over time. All those expenses don’t reduce capital
gains for the homeowner, but impact any real gains. Although,
We have to live somewhere and for the most part, real estate does
go up with inflation
Posted by DigiNomad on 26th of Jul 2024 at 04:12 pm
Yes. I was in a 1 year / 2 semester, 2 hours per class, 5 days a
week CFP study group back in the day and we debated this topic
hotly on quite a few occasions. The consensus was mostly that
residential RE is not a great investment...probably break even or
worse given all the data. However, we also decided that it was
probably better for Americans be in it anyway because it's a form
of forced savings, even if the return profile is slightly negative,
on average. Americans are notoriously bad at saving, so this
form of forced savings has benefited them greatly. Nothing wrong
with knowing your weaknesses and using a gimmick to get around it
instead of actually addressing the root problem....it typically
works out.
The pain to reach "consensus" was no joke though. People tend
to lose their minds when you first suggest that RE is not a great
investment.
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Steveo - I'm not good
I took a long on this amazing triangle, tight stop ...
Posted by DigiNomad on 26th of Jul 2024 at 03:14 pm
Steveo - I'm not good at it the actual measurement...the theory mostly gets me done...but there are a few good sources on X you should check out.
The thing that works for me is simply looking at an options chain and putting myself in the position of the dealer. If I'm selling a crap ton of out of the money calls, I might think the buyers are morons, but I have to buy the stock to hedge in case they just happen to be right. If I'm selling them 10 delta calls, I have to buy 10 shares to neutralize and just pocket fee...and then I have to buy more as price / delta rises.
The calls far outweigh the
Posted by steveo on 26th of Jul 2024 at 03:16 pm
The calls far outweigh the aug options....but very few on the OTM options, which is what one looks at to anticipate Gamma Squeeze? Why would the market makers let themselves get played like that?
They get paid to make
Posted by DigiNomad on 26th of Jul 2024 at 03:17 pm
They get paid to make markets. They are fine with neutral. Lots of transaction fees.
But yes, the degens figured out how to play them...and now the big boys have joined in on the larger names. I'm sure there are super computers keeping the dealers neutral.
It's the same question people
Posted by DigiNomad on 26th of Jul 2024 at 03:29 pm
It's the same question people should ask themselves about real estate. If it's such a great investment, why do the banks loan me the money for a measly APR when they could just buy it themselves and get in on the good stuff? There's nothing preventing them and they have a duty to shareholders. Well, it's because they are typically on the right side of the real estate trade over the long term. In other words, RE is not the panacea investment it's cracked up to be...not by a long shot. If I was wrong about that, I promise the banks would be in on the buy side of the trade.
I agree with you -
Posted by tmladucky on 26th of Jul 2024 at 04:01 pm
I agree with you - banks don’t want to pay the taxes, do maintenance, pay utilities or special assessments, insurance, HOA fees, etc. over time. All those expenses don’t reduce capital gains for the homeowner, but impact any real gains. Although, We have to live somewhere and for the most part, real estate does go up with inflation
Yes. I was in a
Posted by DigiNomad on 26th of Jul 2024 at 04:12 pm
Yes. I was in a 1 year / 2 semester, 2 hours per class, 5 days a week CFP study group back in the day and we debated this topic hotly on quite a few occasions. The consensus was mostly that residential RE is not a great investment...probably break even or worse given all the data. However, we also decided that it was probably better for Americans be in it anyway because it's a form of forced savings, even if the return profile is slightly negative, on average. Americans are notoriously bad at saving, so this form of forced savings has benefited them greatly. Nothing wrong with knowing your weaknesses and using a gimmick to get around it instead of actually addressing the root problem....it typically works out.
The pain to reach "consensus" was no joke though. People tend to lose their minds when you first suggest that RE is not a great investment.