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Im just learning about options, and I was looking at TSLA yesterday.
(Playing around on a demo account). I noticed that there were 8000 volume @ 2000
for TSLA on the Weekly option 24 July 2020 (2 days to go)
The current price is 1592 which implies these ppl believe TSLA is going to go up 26% in 1 day
Surely this is just crazy? You can sell the option at 10.75, so 1 option in 1 day should make $1075
I'm just wondering what am I missing here?
Is this a strategy where it works 99% of the time but the 1% it hits you bad?
Also is this what Nassim Talib refers to? As in he buys deep OTM puts on the S&P
and then every 1% of the time it does pan out?
Can you help answer these questions from other members on NexusFi?
This is what Taleb refers to when he says "picking up pennies in front of a steamroller". The 1% where you are wrong will wipe out any profits (and then some) for the 99 times you are right. Relative to the tens of thousands of dollars you are at risk for the 1%,the $1,000 short call is just not worth it as a strategy
