Let's say I strongly suspect the AI bubble will burst and take at least 1/3 off the value out of the NASDAQ 100 in the next year. Apparently the way to make that bet is to buy a put option reflecting that belief (e.g. against the QQQ index).However I'm not a trader and don't understand what all this shit means: https://finance.yahoo.com/quote/QQQ/options/Can anyone walk a neophyte through the process of finding an options that reflects what I want to bet on?
>>61002383>strongly suspect the AI bubble will burstenjoy losing your money, you are betting against the money printer on a strategic national treasure therealso first bubble to burst without the bubble companies themselves even doing an ipo first, you really think a burst will happen on the vcs themselves that set the price in the first place
Basically given the IV on these you will probably get theta crushed if you buy anything 1+ year out. Probably your best bet is the 9/18/2026 595 puts or 600P puts.
>>61002383>the AI bubblelmao
>>61002401Once there's a recognition that there's been hundreds of billions of malinvestment with no hope of recouping even a fraction of that investment how could they not be a collapse in value?If tech stock PE's come down just to pre-COVID norms or broader market norms that would take a third off their value it seems. Seems far from improbable to me.
SQQQ
>>61002439anon i say this to you in the full knowledge you will ignore me and hope you remember it so you can seethe all the harder laterstop trying to think you can time the market, you cant especially with your low iq takesmaximize your income from waging right now, get a second job or double shift and throw everything you get after bills monthly into the mag 7 and crypto, then dont sellthis is the path to making it and its very easyyou think you can beat the market, you will lose it all and seethe uncontrollably, but never say you were never shown the way
>>61002438Regarding NVIDIA being at all time highs. A closer look should be taken at the deal with OpenAi. This deal sees NVIDIA essentially extending loans to OpenAI to buy their chips. So why couldn’t OpenAI go to the investment banks or private equities? Because none of them would touch it. Guess why?So NVIDIA is doing something Cisco Enron Lucent and nearly all the big tech companies did at the top of the dotcom bubble. Most of who no longer exist. Propping up their customers who can’t afford the buildout in ai which means buying NVIDIA incredibly expensive chips. (which is wild amounts of money). Why did NVIDIA do this? Because seeing none of the big banks or investors feel comfortable lending into what the worry is now another peak tech bubble. They were seeing inventory increase and to avert the bubble topping out and a natural break until profitability catching up. They hit the accelerator.This doesn’t take a huge genius to figure out. If you have to lend your customer money to buy your product. You cannot justify such an incredibly large share price. Because there’s a correction coming. This bullshit went to all out fraudulent levels to secretly prop up share prices in dotcom boom. Lead to jail for some. And death for some household names.
>>61002479most of them are overpriced and to some degree disposable except 3: google, apple and microsoft. id bet on those more than the others. nvidia is likely ovepriced, who gives a fuck about netflix and tsla is a meme that can go either fucking way. there is no world without the 3 i mentioned though
>>61002479If I'm understanding these put options the most I can lose is what I pay for the option, but I stand to gain a lot if my hunch is right and there's a big downturn in valuation (whereas I'd stand to lose a lot in the "do nothing" case of just invest blindly in indexes)?Seems to me all the people out there who invest blindly in indexes are a part of why these tech stocks are so over-inflated: as their share of the market as increased, blind investors - e.g. retirement funds that just buy the SP500 or whatever - have been plowing a larger and larger share into these few stocks all dependent one way or another on AI hopium)
I'm truly a noob and am trying to wrap my head around this stuff. If I understand this correctly at all (see screenshot), for $14 a share I'd have the option to sell a share for $480 on 2026-09-18 (the current price is $595 a share). So if the price on 2026-09-18 is below $480 (or below $466 considering the $14 option cost?) I'd be in the money?Excuse me if that isn't right at all.
>>61002531Wrong picture.
>>61002523>whereas I'd stand to lose a lot in the "do nothing" case of just invest blindly in indexesyou never lose anything if you hold spot over the long term anon, read this again and again until you fully understand its meaningyes with options you only put at risk the quote price but these things have an inherent true and permanent go to zero mode in themhere use this to calc the exact positioning at leastnow that the greeks can really kill your value fasthttps://www.optionsprofitcalculator.com/
>>61002566Thanks for the link to the calculator. Definitely there's an element of market timing needed here since the cost of the contract become much more significant as you go further out. I should probably study up on previous investment bubbles to see what triggered the valuation downturn / what signs there were it was coming....
>>61002383If it's everyone is calling it a bubble then it's probably not.
>>61002531generally speaking you always buy those in batches of a 100 contracts, so that $14 price point is actually $1400 minimum and then a whole multiple there of
Sell puts. Sell comfortably at a strike price below current stock value to mitigate risk. If put expires worthless then you collect premium, if it gets put to you then you have the stock and can just hold it until it recovers and then sell a call above what you paid for it.
>>61002629>since the cost of the contract become much more significant as you go further outif you trade options, first study up on how the greeks actually value the price of the options you plan to acquire, thats like the absolute basis to understand when its a profitable time to use optionsgenerally tho single stocks get quite expensive far out, so you are forced to buy puts against the nasdaq or s&p
>>61002638Yeah but then you run the risk of getting exercised, and op is just learning.
>>61002653Like I said if you get it put to you just hold onto shares until stock price recovers then you sell a call above what you paid for and collect premium on top of it
>>61002383Do you have a timeframe on this bubble-burst? If not, options trading is going to cost you money.Options are good for short-term swings. I've bought a bunch of calls on IBIT because October is usually a massive up month for Bitcoin. If we get even the average performance of the last 12 years, I should see a 500% return. If we get the median of the last one-year-post-halving years, I'll get a 1000% return.
>>61002483>This doesn’t take a huge genius to figure out. If you have to lend your customer money to buy your product. You cannot justify such an incredibly large share price. Because there’s a correction coming.The problem is that the market can stay irrational longer than you can stay solvent.
>>61002383>>61002531>>61002534Here, let me give you a concrete example:https://finance.yahoo.com/quote/IBIT/options/?date=1761868800I've bought IBIT251031C00064000. Note that these are CALLS, just to be clear (I realize you're asking about puts, they behave the same except use minus signs instead of plus signs for your math). This is currently priced (last trade) at $2.14 (so $214 for a single trade of 100 options -- don't ask me why they don't just quote $214 for the hundred-pack since you can't really buy one-share options on the normie market). The underlying price is $62.25 based on the current price of BTC at $109,450ish.Note that the option is underwater right now, IBIT has to go to $62.25+2.14=$64.39 per share in order for the option to be effectively valueless to me if bought at the right-now price (it will return exactly what I paid for it, actually less because they always try to screw you out of a few percent, not to mention the trading fees).However, if BTC does its usual and goes up 40% in October, we'll be at $153230, which translates to an IBIT price of 87.15. 87.15-64.39=$22.76 per call or about 10.5X (1050%). Subtract 1 for the "that's what I paid for this shit in the first place" factor so 9.5X or 950% gain.You have to buy calls or puts based on a mix of your expectations and how greedy you are. I can buy more than twice as many calls (they're 99 cents each right now) at the $68 strike price, in which case I make $4 less per call but can afford double the number of calls. So I would make $18.77 each.If I were buying ten of the $64 strike but twenty of the $68 strike that would mean $22760 versus $37540.But let's say we have a complete shit Uptober and it only goes to $68. My $68-strike options would be worth zero intrinsic, but my $64-strike would at least return four bucks to me, so $4000 versus $0.BTW, your orange ID (and mine too) is telling you to invest in Orange Coin call options like I did. :-)
>>61002383You are fucking stupid. Just do sportsball bets.>but dotcomAs said. Fucktarded. They are not comparable.
>>61002483>>61002629The issue isn't that you're believing that tech is overvalued right now and in for a correction (though it's actually not a bubble. Study actual bubbles. Currently, investors, retail, and corpos are absolutely restrained compared to a true bubble). It's that you're trying to predict the market. Like the initial OP was predicting a 1/3 correction within one year. He's a dilettante, but even an experienced quant wouldn't make a prediction so bold. Everyone can see that the probability of a correction is high (but far from certain), but what if it's a 40% correction over 30 months? Your puts will expire worthless even if the markets beared like you foretold.
>>61002439kekHe thinks THEY will let that happen
>>61003171>but what if it's a 40% correction over 30 months?Doubt it, the AI bubble is pretty ridiculous. But it's also a tiny fraction of the market. And >>61002771>the market can stay irrational longer than you can stay solvent.
>>61002383AI is not in a bubble.Anyway, bubbles are only recognised after they burst.
>>61003856>bubbles are only recognised after they burst.Well, that's complete bullshit. There have been plenty of ridiculously obvious bubbles. October-December 2017 Bitcoin was easy for anyone with more than two brain cells to spot. Same with the March 2022 crash.
>>61003856If more money is invested into something that it will end up being worth in the end, it's the excess value it holds today a "bubble"?What defines a bubble vs. simple over-valuation?
>>61002383I'm too low IQ to understand how options work
>>61002383Sorry
>>61002401Everyone thinks the bubble isn’t a bubble, that’s what makes it a bubble.
>>61002383Is there really a bubble though?
>>61004074* Pick a stock/ETF/security.* Pick a strike price.Difference between the two is the intrinsic value.* Pick an expiration date.Add some shekels to account for the likely range of value plus some profit for the option creator/seller.That's basically it. The shekels "decay" between CURRENT_DAY and expiration day. The intrinsic value moves up and down depending on the difference between strike and underlying asset price.Buy calls if you think the asset will go up. Buy puts if you think the asset will drop in price.There are ways to profit if you expect the asset to move suddenly but don't know which direction. There are trades you can make that will allow you to profit if the asset crabs. There are weird things you can do as well.
>>61004065I'm not an expert, but considering the dotcom bubble, I think the defining characteristics are- Complete loss of rational basis for valuation- Valuation solely based on the assumption of future investment, or some other incredibly unlikely, and ill-defined future state- Possible shady dealing or financial fuckery- The ability for price to drop to drop very quickly ("pop") to the "actual" valuation- Societal implications when it "pops"With that as a definition, AI is definitely a bubble. The valuation is based on the idea of "what if AGI?", and every company wanting a piece of that hypothetical pie, and every investor wanting a part of those pies. OpenAI buys capacity from hyperscalers, hyperscalers buys hardware from nvidia with that money, and nvidia "investing" that money back into OpenAI, each time pumping their stock price, without there actually being any "value" produced. IIRC 15% of the S&P is AI related, and probably another 30-40% is AI adjacent, if that valuation drops quickly, there will absolutely be consequences for society at large.
>>61004372Clearly this is set to come down to earth, although no idea how to time it.
>>61004372>>61004471but timing is everything as you cannot be a permaboboputs far out are expensive even so you must be able to time the burst rather accuratelytech stocks having a high pe has been normal for a while now and is not a sign of the imminent apocalypseso show me a metric that does show there is immediate distress in the tech complexas it stands op is still far more likely to irreversibly lose all his money than win here
>>61002383Don't fight the trend, especially if you're new to options. AI is definitely a bubble, but markets can always stay irrational way longer than you expect. A funny thing about options is you can be right about the size and direction of a move and still lose money if you're too far off on the timing. Even if you're right on direction, size, and timing of a move, you could still get killed by "volatility crush" (please google it) if that move was already priced in.And it bears repeating, don't fight the trend. A lot of new traders get wiped out because they try to be cute and short a rising market or vice versa. I wouldn't even touch AI or tech in general. Instead focus on something with rock solid fundamentals, like GDX, and buy the dips. That way, even if you're wrong on the timing, there's a good chance you can hold for a while and avoid booking a loss. By buying long duration options on strong fundamentals and running with the trend, you can take out a lot of the voodoo and guess work of trading options.
>>61004471>no idea how to time it.ding ding ding
>>61002383Check out optionstrat.com. There's a bunch of complex strategies options traders use to trade not just price, but time or volatility. Starting out, your broker may restrict you from complex strategies, but that's okay. Open up "Long Call" or "Long Put" in the optimizer and play around with the sliders to see how the risk and return change in different conditions. Edutainment.
>>61002483retarded takelook at their revenuealso, if openAI stopped their training programs, their profits would total above 12Byou are essentially delusional
>>61002383Dont throw your money on financial instruments you do not understand, the jews will destroy you.
>>61002435>you will probably get theta crushed if you buy anything 1+ year out. The best options-investing thing I ever read was in one of the books about the 2007-2011 crash. One of the groups who profited heavily off the crash was a couple of guys who were trying to build their own little hedge fund or whatever, even before the 2007 mess. Their first big trade was an options bet a year or two before the financial crash became obvious that it was going to happen. Some company was being investigated for financial irregularities and its stock price had been cut in half. They figured that (1) the investigation would take a few months to a year, (2) when the investigation concluded the company would either go out of business or regain its previous valuation, and (3) buying an options straddle would let them profit massively.So they bought a few hundred thousand dollars of both puts and calls right around the current strike price, and six months later the calls were worth a fortune while the puts were worthless. It was an easy setup and a huge opportunity for profit, and they nailed it.
>>61004471>Investing is easy! I have so many Ideas!"The market is easy to predict, its just impossible to time..."bahahahahahahahaha good luck friend. Welcome to our world.
>>61002383Just throw it in an inversed nasdaq ETF, way less of a chance of your account getting blown up and being completely fucked, worse case scenario you just lose as much money as you can stomach before selling.DO NOT FUCK WITH OPTIONS IF YOU DON'T KNOW WHAT YOURE DOING YOU WILL GET FUCKED
>>61002531>>61002534Learn greeks
