Trip7

No sense in going back and forth about this. Time will decide the result of all this. It's my opinion that Tesla stock will be cut in half this year and ARKK gets sent to the shadow realm. Again I'm a Tesla owner, LOVE the car and think it's a great company. But it's stock has a fan base that has bid up the stock to irrational levels. People will be surprised when the stock drops steeply but they shouldn't be. History doesn't repeat itself but it sure does rhyme.

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mispoken

I say it’s risky because the chances of a stock exploding and taking the contract premium with it are small. Very small. But, that’s risk/reward. High risk for high reward. By its very nature you’re taking extremely high risk for the potential of extremely high rewards. But the probabilities aren’t in your favor. The market doesn’t care about your version of valuation. You know what cares even less? Option contracts. Even less? illiquid option contracts.

You had some sort of epiphany from some book you read, and you were incessantly talking about PLOC. You say Tesla and ARK are highly likely to result in permanent loss of capital, but you do realize stock ownership in these don’t EXPIRE like a call does, right? Rhetorical question, I know, but if you buy $5k in call options the odds of losing all of that $5k are exponentially larger than just buying shares. The very nature of a long call has a significantly higher risk of ending at $0 than Tesla or Ark. You realize that a 2023 $10 call option in AZUL has a 25% chance of profit (making one penny). At least stock ownership gives you a 50/50 shot. You’re not playing the odds or investing, you’re playing the lottery. Options don’t care about your valuation.

I’m not faulting you for what you’re doing, as I’ve stated, I too dabble in these high risk vehicles hoping for a high return. I’ve won HUGE and I’ve lost BIG. But it’s not a long term investing strategy, in my opinion. Maybe once you’ve got 5-10 years of data you can prove it to yourself one way or the other.

Throwing $100k at options, hoping one results in 100% return at the expense of the rest, to me, isn’t investing. Just gambling. But, that’s just me. I have a method that I’ve proven works and I’ve provided the data. The stock challenge (which apparently really isnt a stock picking challenge, just a long call buying challenge?) will be difficult to quantify since you’re up against several cycles expiration as time goes on. My thought was to buy stocks and hold them and see who comes out ahead. But hey, whatever, it’s just for fun!

But here’s where we do agree. BABA. I like it.

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Buck Rogers

The one thing I agree with you on is..."Time will tell".....I vehemently disagree that you are the way, the only way, and those who fail to follow your sage advice are doomed to epic failure. Since "the most interesting man in the world" moniker is taken, do you ever get tired if proclaiming yourself to be the "smartest man in the world"?

Or is this really you, just rebranded? "MEOW"

Trip7

By no means am I saying my way is the only way. Multiple ways to skin a cat in this game. All I'm saying is that ARKK and TSLA are in bubbles and will eventually crash.

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Trip7

You act like I put my all my money in Deep Out of the Money options that expire in 3 months. I'm using LEAPS as a stock substitution strategy. You yourself stated that if one or two out of 10+ takes off the competition is over. How is that extremely risky with an expiration date 1+ year away? You were correct on that note, if BABA takes off its game over. Everything else can go to zero and my returns will still be spectacular. That's the power of LEAPS when used on deeply undervalued securities. BTW I learned about LEAPS investing from famed value investor Joel Greenblatt:

In his book You Can Be a Stock Market Genius, Greenblatt shares his secret to generating parabolic returns with a long-term options contract—Long-Term Equity Anticipation Security (LEAPS).
(On using LEAPS) “There is almost no other area of the stock market where research and careful analysis can be rewarded as quickly and as generously.” — Joel Greenblatt

https://steadycompounding.com/option...-uses-options/


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mispoken

It’s all good man, do your thing. It’s gonna work, or it ain’t.


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DenVa

I did think you had Tencent LEAPS, but realize you couldn’t, so my mistake. However, your idea of risk is different than mine, so I can understand where we would disagree on leverage amounts.

Buck Rogers

Not to pour salt in any wounds, but a 6% stake in 1 company after a 56% drop could have represented a 15% stake on initial purchase( assuming an unfortunate buy time)

By the way, most gamblers, speclators, and/or investors have experienced this " life lesson" Including me. Once bought a reit that had dropped 50% due to a short and distort play. Thought it couldn't go much lower unless of course the ceo did a perp walk on the news. 8 months later and shazamm...perp walk on the news...stock immediately crater to a 90% loss....5 years later I'm still waiting on the recovery.

Never say never....the one variable LEAPSare subject to, is that increased leverage is paid with a fixed time duration. One has to be correct in the direction as well as the timing. With a 3$ stock( that used to be 25) it's like buying a LEAP as far as leverage, but no time limit. 🤔

Gunfighter

Your example is one reason I prefer direct ownership vs REITs. If a properly constructed syndication starts to go sideways, you can vote out the manager before they destroy the asset value. DYODD on the offering documents though. Offerings are not created equal with respect to investor protection.

I've moved a good portion of capital out of independent ownership into syndications over the last year for similar reasons to yours. It's a nice option for reducing property management responsibility, while still maintaining direct ownership of real estate. The tax advantages are fantastic, but you have to perform due diligence before each investment vs just adding shares of a REIT.

Big E 757

Back in 2005-2007 time frame, I can’t remember, I almost did this exact thing based on a USA Today article and Jim Cramer. This amazing energy company called Enron was down 60-70% because of a weak earnings report but guidance was strong and it was a solid, established company and there was no reason for the dramatic pullback it had gone through. It was a terrific opportunity to “BUY BUY BUY!!” I almost bought a bunch of Enron stock in my brokeragelink account. Thank God I waited for a confirmed bottom (waited for it to move up some and make higher lows first.)