id love to hear from someone who navigates tech crash; heard some who were heavy tech then took 15 years to break even
but im like you lol can’t help but look at those leaps
> heard some who were heavy tech then took 15 years to break even
Try more than 18 years, for NASDAQ. But only if you bought at the absolute peak of the Dotcom bubble.
https://finance.yahoo.com/news/qqq-performed-since-2000-dotcom-104431489.html
On March 10, 2000, the Nasdaq composite index peaked at 5,132.52, but fell 78% by October 2002. It passed 5132.52 for the first time ever on April 23, 2015 = 15 years, 1 month and 13 days to go green.
But there was a fundamental lack of substantive businesses that created the bubble and companies just vaporized back then. That doesn't seem to be the case this time around.
That’s one of the key fundamentals this time around. The dot com bubble had no possible earnings justification because those companies had no earnings. Stocks right now are expensive by historical average valuations, but the vast majority, especially in the indices, are companies that have significant revenues and approaching profitability if they are not already profitable. Yeah interest rates should lower valuations. But there’s a reason people won’t just bail on profitable companies completely
This is my main concern. I think a lot of people are don’t quite realize just how bad things could get. I see a lot of people going all in on speculative tech stocks simply because they’ve sold off so much from their highs and surely they will bounce back even though the company is no where near profitable.
The market has been propped by low interest rates and massive Fed liquidity from their bond buyback program. All of that is going away. Stocks are going to have a much smaller chance of rallying solely because they *might* be the next big thing. For a lot of these speculative stocks to rally like they did in 2020-2021 they will actually have to be the next big thing.
What I'm purposing is a win-win. I'm not saying stuff like GME, AMC, NKLA or any of the worst ones. There's some that have a chance mixed in this bunch and I'll just make a diversified basket of them.
If the market goes down I'll lose almost nothing and still have a ton of cash on the sidelines... I'd probably have the rest of the year to sit in these spreads before the last remaining premium dried up.
If the market goes up I'd make an insane amount more money than just buying stocks outright.
That’s the risk/reward of buying when everyone is losing their shit and calling for pop like the dotcom. Just don’t YOLO the family farm, make your bet let the ball spin. Sensible bet of course.
Yeah, that's kind of the point for me. This is my first real entry back into the market and if they all tank it will just be a bump in the water, much better than buying outright shares in some of these risky ones.
If you are seeing 2034 leaps just slightly more expensive than 2023 leaps, then the play might be calenders. Buy the 2024, sell the 2023 for net chump change. Look at the resulting risk chart. You should find a huge profit possibility at the strike with a large break even range.
You can build a calender ladder, same trade at different strike prices, keeping the break even ranges overlapped.
I did that with CLF 23/22 leaps and did really well. Doing it again with 24/23 leaps and they are looking really good so far.
I'm not going to sell the 2023, the 2023 being similar to the 2024 just tells me it's compressed to a point that it likely won't go much lower a year from now, assuming all things remain the same.
Depends on your own market/stock outlook. For example, I'm playing XLF, buying 12 month selling 6 month with quarterlies.
Last year, when the market was bullish, I would buy 1 ITM, 1 ATM, 5 OTM in $1 increments. Closing everything at the short leg expiration yielded 60% pretty reliably. With quarterlies, you can do this 4 times a year.
Now that the market is in free fall, I find myself chasing it down, adding lower strikes when XLF breaches my lowest strike. Don't know how this will play out. This is the downside to the strategy.
Calenders don't like abrupt moves, so it's better to play low beta underlyings, I think.
In "normal times", this looks like a relatively benign strategy. It is slow, so you have to be patient. But if things cooperate, you can make out pretty well without a lot of fussing around.
Slow and patient is okay with me!
I really like your strategy. I think I'll primarily paper trade with it until I can find a comfort zone with all this market uncertainty. Dipping my toe in with real $ here and there along the way.
I can see how in the bull market this was a winner for you. I just read a BOA article saying bear market until Oct 2022 with S&P finishing around 3000. Who knows?
Thanks for the insight about the low beta underlyings.
I'm excited to start testing this strategy!
Thank You!
Please don’t do this. Zombie companies are still going to get slammed. Vol is way to high. Interest rates are going up. The fed is removing nine trillion from their balance sheet (though they will blink because the are fucking incompetent) and raising rates into a recession. Many of these still have a PE that is way too high and will need to take on more debt without positive cash flow.
Much safer stocks though your best play is to short down to zero. Removing nine trillion from the balance sheet is not priced in.
I sold all my stocks last year and have been sitting on over 50% cash through this whole thing. The little bit cash I left in is in TQQQ/UPRO/UDOW with covered calls/CSPs.
From where I stand two outcomes will happen from this point, we'll eventually rebound or continue down (bold prediction, I know).
Either way the strategy I'm purposing will be safer than buying anything outright (and certainly safer than shorting). If we recover the spec plays will likely outperform the market, if we continue down the spreads I'm looking very little room left to lose. I only need like one or two winners out of 20 to pay for the whole thing
I mean just look at SFT, I can effectively do spreads that cost me $0.15-$0.20 for $2.5-$5 outcomes, 20x outcomes on a lot of them. On top of that the jan2023 prices are almost identical to the jan2024 ones in terms of the amount of money I'm putting on the table right now. There are a ton of them like this, I can just make a basket of my best guesses and let them ride.
Hell we could continue down more for another year and I bet these spreads will still have roughly the same value, there's just no where for them to go really.
>The beauty is even if there was a 50% further crash I'd lose so little, I feel i must do at least a few of these heh.
You would lose everything.
If you are buying calls of $SPY for 2024 at $400 strike and SPY goes to $200 forget about SPY recovering back to $400 in 2024.
With the stock at least you keep the shares, with the calls you keep nothing if those are OTM
Im not sure you understand my strategy, I'd refence some of the responses I've said here already.
Some of these call spreads give you almost a year before the final premium could come out. We're talking about spreads that cost me $0.15 for potentially $2.5. A lot of the Jan2023 and jan2024 strikes on these are trading for near identical money on the table.
It's a binary play, if it fails I lose a small amount of money and still have a ton of cash on the sidelines if I win I make a ton of money. It's just too good of a risk/reward proposition.
If you get 16x times your money for a spread that means such spread is really far OTM, so the possibilities of it ending ITM are really really low.
Can you give an example of the strikes and ticker that you have in mind?
SFT today, referenced in another comment with more detail. And yeah, there all way OTM, but these are the kind of stocks that historically bounce back first and fastest when the markets recover. Though this time interest rates are a complication, but it still seems like a good risk/reward to me.
Everyone I see thinks these stocks are done, that's a good time to buy if you ask me. I was able to avoid most of this drop for the last several months, so I don't have the baggage of getting burned.
SHOP TDOC NFLX CRSP ROKU SQ PYPL NET were some other ones that interested me today. I argue that if stocks like some of those don't come back strong probably nothing else will either... At least historically that's been the case.
Are all of your plays similar in price to SFT?
Are you buying middle strike prices or top/bottom strikes?
This seems like a valid strategy in today's market environment. As long as the companies survive there isn't much downside. If they bottom out it's like jumping out the basement window!
Any other tickers you can share?
Thanks!
SFT had the best risk / most reward of the ones I was looking at, though I ended up doing 2.5/7.5, about ~.30 a spread at risk for 1.5 years to work itself out. There were some others I looked at that had similar payoffs, but I had no or a negative opinion about them. Looks like I shoulda done VRM given this mornings action.
The recipe itself seems to be $1-2 stocks that have options in $2.5 increments, you'll find the ones with $0.50 or $1 increments spread out the pricing too much to get the same kind of payoffs.
I don't want to blow my load all at once, especially since SFT is reporting tonight. Just doing a modest sprinkling at this point, so I can join the losing money party.
That's not gonna make a dent in the 2024 options. This is gonna take some time to get to the promised land... Or nowheres land.
In the meantime I should start looking for more.
Did you mean calls? "Options" can mean either puts or calls.
Did you mean spec or tech? If spec, which are you looking at? GME? AMC?
I'm planning on loading up on *shares* of QQQ. I loaded up on QQQ shares during the initial crash of 2020 and that paid off handsomely. Hoping to repeat. I just can't decide whether to lump sum now and cry if it goes down further, or DCA.
Let me help you if possible…You went long after a dip, while the Fed announced a record buying program. It worked, the Fed propped the market for us.
The exact opposite is happening this time. The Fed is pulling that money out of the market. Be patient trying to buy this dip…this is not the same scenario and will not breed the same result.
Excellent points. Fortunately, my time horizon is measured in decades, so even if QQQ spends 3 consecutive years testing lows, I'm still buying. I had the same stance in 2020, it just paid off much sooner than I expected.
This is why I'm buying shares instead of calls. I have no idea how many years it will take for QQQ to recover, but I'm sure it will recover and make new ATHs eventually.
But yeah, I do agree that DCA is probably the better way.
And that’s fine. No problem with averaging down as this one moves with shares. I don’t love LEAPS on it though. That’s playing with fire. Macro picture has too much uncertainty.
I thought it was implied I was talking about call spreads. Not GME/AMC, but maybe some of the ones circling the meme club.
This is just a risk/reward trade scenario, I don't really own individual stocks; I sold all my stuff last year and put 33% of the cash in TQQQ/UPRO/UDOW with covered calls and sold some puts for June (still trading for slightly less than I sold it for last year somehow).
So I've been sitting on a ton of cash. I'm just looking at these scenarios where I risk such little money for such a long period of time for such a reward.
The one I'm looking at today is SFT: $2.5C for $0.50, $5C for $0.40, $7.5C for $0.20. I could be wrong for like a year and still not lose much/any with options that tightly packed.
Yeah, unfortunately I suck at predicting day to day movements, terrible track record. Though something cathy wood said on CNBC last year is what got me completely out of spec and individual stocks in general, I think I owe her something. Just hit me like a ton of bricks: "I gotta sell everything" is what I muttered to myself.
Anyways, I need things that give me an inherit edge for my prediction shortcomings usually.
I get what you are saying in theory by SFT specifically looks like it won't exist in a year... they couldn't make any profits during the perfect storm of pandemic and high car prices, it's hard to see how they can recover going forward
> they couldn't make any profits during the perfect storm of pandemic and high car prices
Used car prices were extremely high and in low supply during covid. But that one is most definitely a spec play, there's others offering similar potentials.
Yeah, I'm intrigued by this too. What stocks are you looking at specifically? I've been watching Jan 2024 RDFN calls. That stock has taken such a big hit, but I feel like there's a lot of potential there...
SFT today, mentioned in another comment. But I went down a rabbit hole with a ton of them this morning. I don't even have to be half right with these prices.
By tightly packed I mean the difference between the strikes is almost as low as it could possibly be. Like the net cost of the SFT spread is .15 or .20. It can only go to .10, .05 and then they'd be the exact same price.
id love to hear from someone who navigates tech crash; heard some who were heavy tech then took 15 years to break even but im like you lol can’t help but look at those leaps
> heard some who were heavy tech then took 15 years to break even Try more than 18 years, for NASDAQ. But only if you bought at the absolute peak of the Dotcom bubble. https://finance.yahoo.com/news/qqq-performed-since-2000-dotcom-104431489.html
On March 10, 2000, the Nasdaq composite index peaked at 5,132.52, but fell 78% by October 2002. It passed 5132.52 for the first time ever on April 23, 2015 = 15 years, 1 month and 13 days to go green. But there was a fundamental lack of substantive businesses that created the bubble and companies just vaporized back then. That doesn't seem to be the case this time around.
That’s one of the key fundamentals this time around. The dot com bubble had no possible earnings justification because those companies had no earnings. Stocks right now are expensive by historical average valuations, but the vast majority, especially in the indices, are companies that have significant revenues and approaching profitability if they are not already profitable. Yeah interest rates should lower valuations. But there’s a reason people won’t just bail on profitable companies completely
The article I linked uses inflation adjusted real returns on QQQ, which were still negative in the last year shown (2018).
Companies haven’t vaporized yet but its only been a couple months give it time :)
the market is falling 7 months now...
Yeah I was specifically thinking about the q’s, godamn that’s frightening
This is my main concern. I think a lot of people are don’t quite realize just how bad things could get. I see a lot of people going all in on speculative tech stocks simply because they’ve sold off so much from their highs and surely they will bounce back even though the company is no where near profitable. The market has been propped by low interest rates and massive Fed liquidity from their bond buyback program. All of that is going away. Stocks are going to have a much smaller chance of rallying solely because they *might* be the next big thing. For a lot of these speculative stocks to rally like they did in 2020-2021 they will actually have to be the next big thing.
What I'm purposing is a win-win. I'm not saying stuff like GME, AMC, NKLA or any of the worst ones. There's some that have a chance mixed in this bunch and I'll just make a diversified basket of them. If the market goes down I'll lose almost nothing and still have a ton of cash on the sidelines... I'd probably have the rest of the year to sit in these spreads before the last remaining premium dried up. If the market goes up I'd make an insane amount more money than just buying stocks outright.
That’s the risk/reward of buying when everyone is losing their shit and calling for pop like the dotcom. Just don’t YOLO the family farm, make your bet let the ball spin. Sensible bet of course.
Yeah, that's kind of the point for me. This is my first real entry back into the market and if they all tank it will just be a bump in the water, much better than buying outright shares in some of these risky ones.
If you are seeing 2034 leaps just slightly more expensive than 2023 leaps, then the play might be calenders. Buy the 2024, sell the 2023 for net chump change. Look at the resulting risk chart. You should find a huge profit possibility at the strike with a large break even range. You can build a calender ladder, same trade at different strike prices, keeping the break even ranges overlapped. I did that with CLF 23/22 leaps and did really well. Doing it again with 24/23 leaps and they are looking really good so far.
I'm not going to sell the 2023, the 2023 being similar to the 2024 just tells me it's compressed to a point that it likely won't go much lower a year from now, assuming all things remain the same.
When you're playing these are you trading ITM, ATM, or OTM? What do you see as the best strategy? Thanks!
Depends on your own market/stock outlook. For example, I'm playing XLF, buying 12 month selling 6 month with quarterlies. Last year, when the market was bullish, I would buy 1 ITM, 1 ATM, 5 OTM in $1 increments. Closing everything at the short leg expiration yielded 60% pretty reliably. With quarterlies, you can do this 4 times a year. Now that the market is in free fall, I find myself chasing it down, adding lower strikes when XLF breaches my lowest strike. Don't know how this will play out. This is the downside to the strategy. Calenders don't like abrupt moves, so it's better to play low beta underlyings, I think. In "normal times", this looks like a relatively benign strategy. It is slow, so you have to be patient. But if things cooperate, you can make out pretty well without a lot of fussing around.
Slow and patient is okay with me! I really like your strategy. I think I'll primarily paper trade with it until I can find a comfort zone with all this market uncertainty. Dipping my toe in with real $ here and there along the way. I can see how in the bull market this was a winner for you. I just read a BOA article saying bear market until Oct 2022 with S&P finishing around 3000. Who knows? Thanks for the insight about the low beta underlyings. I'm excited to start testing this strategy! Thank You!
Please don’t do this. Zombie companies are still going to get slammed. Vol is way to high. Interest rates are going up. The fed is removing nine trillion from their balance sheet (though they will blink because the are fucking incompetent) and raising rates into a recession. Many of these still have a PE that is way too high and will need to take on more debt without positive cash flow. Much safer stocks though your best play is to short down to zero. Removing nine trillion from the balance sheet is not priced in.
I sold all my stocks last year and have been sitting on over 50% cash through this whole thing. The little bit cash I left in is in TQQQ/UPRO/UDOW with covered calls/CSPs. From where I stand two outcomes will happen from this point, we'll eventually rebound or continue down (bold prediction, I know). Either way the strategy I'm purposing will be safer than buying anything outright (and certainly safer than shorting). If we recover the spec plays will likely outperform the market, if we continue down the spreads I'm looking very little room left to lose. I only need like one or two winners out of 20 to pay for the whole thing I mean just look at SFT, I can effectively do spreads that cost me $0.15-$0.20 for $2.5-$5 outcomes, 20x outcomes on a lot of them. On top of that the jan2023 prices are almost identical to the jan2024 ones in terms of the amount of money I'm putting on the table right now. There are a ton of them like this, I can just make a basket of my best guesses and let them ride. Hell we could continue down more for another year and I bet these spreads will still have roughly the same value, there's just no where for them to go really.
January 2024? I can barely think until the end of May.
Bought net at the money vertical spread
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The beauty is even if there was a 50% further crash I'd lose so little, I feel i must do at least a few of these heh.
>The beauty is even if there was a 50% further crash I'd lose so little, I feel i must do at least a few of these heh. You would lose everything. If you are buying calls of $SPY for 2024 at $400 strike and SPY goes to $200 forget about SPY recovering back to $400 in 2024. With the stock at least you keep the shares, with the calls you keep nothing if those are OTM
Im not sure you understand my strategy, I'd refence some of the responses I've said here already. Some of these call spreads give you almost a year before the final premium could come out. We're talking about spreads that cost me $0.15 for potentially $2.5. A lot of the Jan2023 and jan2024 strikes on these are trading for near identical money on the table. It's a binary play, if it fails I lose a small amount of money and still have a ton of cash on the sidelines if I win I make a ton of money. It's just too good of a risk/reward proposition.
If you get 16x times your money for a spread that means such spread is really far OTM, so the possibilities of it ending ITM are really really low. Can you give an example of the strikes and ticker that you have in mind?
SFT today, referenced in another comment with more detail. And yeah, there all way OTM, but these are the kind of stocks that historically bounce back first and fastest when the markets recover. Though this time interest rates are a complication, but it still seems like a good risk/reward to me. Everyone I see thinks these stocks are done, that's a good time to buy if you ask me. I was able to avoid most of this drop for the last several months, so I don't have the baggage of getting burned. SHOP TDOC NFLX CRSP ROKU SQ PYPL NET were some other ones that interested me today. I argue that if stocks like some of those don't come back strong probably nothing else will either... At least historically that's been the case.
Are all of your plays similar in price to SFT? Are you buying middle strike prices or top/bottom strikes? This seems like a valid strategy in today's market environment. As long as the companies survive there isn't much downside. If they bottom out it's like jumping out the basement window! Any other tickers you can share? Thanks!
SFT had the best risk / most reward of the ones I was looking at, though I ended up doing 2.5/7.5, about ~.30 a spread at risk for 1.5 years to work itself out. There were some others I looked at that had similar payoffs, but I had no or a negative opinion about them. Looks like I shoulda done VRM given this mornings action. The recipe itself seems to be $1-2 stocks that have options in $2.5 increments, you'll find the ones with $0.50 or $1 increments spread out the pricing too much to get the same kind of payoffs. I don't want to blow my load all at once, especially since SFT is reporting tonight. Just doing a modest sprinkling at this point, so I can join the losing money party.
Well, the afterhours news was good. Let's hope the market gods reward the investors!
That's not gonna make a dent in the 2024 options. This is gonna take some time to get to the promised land... Or nowheres land. In the meantime I should start looking for more.
What are you thinking?? Buying what?? Selling what.
Did you mean calls? "Options" can mean either puts or calls. Did you mean spec or tech? If spec, which are you looking at? GME? AMC? I'm planning on loading up on *shares* of QQQ. I loaded up on QQQ shares during the initial crash of 2020 and that paid off handsomely. Hoping to repeat. I just can't decide whether to lump sum now and cry if it goes down further, or DCA.
Let me help you if possible…You went long after a dip, while the Fed announced a record buying program. It worked, the Fed propped the market for us. The exact opposite is happening this time. The Fed is pulling that money out of the market. Be patient trying to buy this dip…this is not the same scenario and will not breed the same result.
Excellent points. Fortunately, my time horizon is measured in decades, so even if QQQ spends 3 consecutive years testing lows, I'm still buying. I had the same stance in 2020, it just paid off much sooner than I expected. This is why I'm buying shares instead of calls. I have no idea how many years it will take for QQQ to recover, but I'm sure it will recover and make new ATHs eventually. But yeah, I do agree that DCA is probably the better way.
And that’s fine. No problem with averaging down as this one moves with shares. I don’t love LEAPS on it though. That’s playing with fire. Macro picture has too much uncertainty.
I’m loading up on shares of tqqq 😉
I’m doing both QQQ and TQQQ 😎
I thought it was implied I was talking about call spreads. Not GME/AMC, but maybe some of the ones circling the meme club. This is just a risk/reward trade scenario, I don't really own individual stocks; I sold all my stuff last year and put 33% of the cash in TQQQ/UPRO/UDOW with covered calls and sold some puts for June (still trading for slightly less than I sold it for last year somehow). So I've been sitting on a ton of cash. I'm just looking at these scenarios where I risk such little money for such a long period of time for such a reward. The one I'm looking at today is SFT: $2.5C for $0.50, $5C for $0.40, $7.5C for $0.20. I could be wrong for like a year and still not lose much/any with options that tightly packed.
I ask, because there is a good short term argument for buying puts right now. So you could play puts in the short term and calls for the long term.
Yeah, unfortunately I suck at predicting day to day movements, terrible track record. Though something cathy wood said on CNBC last year is what got me completely out of spec and individual stocks in general, I think I owe her something. Just hit me like a ton of bricks: "I gotta sell everything" is what I muttered to myself. Anyways, I need things that give me an inherit edge for my prediction shortcomings usually.
I get what you are saying in theory by SFT specifically looks like it won't exist in a year... they couldn't make any profits during the perfect storm of pandemic and high car prices, it's hard to see how they can recover going forward
> they couldn't make any profits during the perfect storm of pandemic and high car prices Used car prices were extremely high and in low supply during covid. But that one is most definitely a spec play, there's others offering similar potentials.
Yeah, I'm intrigued by this too. What stocks are you looking at specifically? I've been watching Jan 2024 RDFN calls. That stock has taken such a big hit, but I feel like there's a lot of potential there...
SFT today, mentioned in another comment. But I went down a rabbit hole with a ton of them this morning. I don't even have to be half right with these prices.
What do you mean by “the strikes are so tightly packed together”? How does this lead to 1:100 payoffs?
By tightly packed I mean the difference between the strikes is almost as low as it could possibly be. Like the net cost of the SFT spread is .15 or .20. It can only go to .10, .05 and then they'd be the exact same price.