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Comment by tempsy | Hacker News Reader

no joke there are several people on /r/wallstreetbets that have turned a few hundred dollars into $1M+ in 2 months.

There are also several people I know who have done so at a craps table. That doesn't make it a sustainable or recommendable activity.

I call BS. There's no casino game outside of a slot machine that someone could play that could turn a few hundred dollars into $1M in a gambling session.

This difference you're missing is the upside is asymmetric with options. Your losses are capped but your gains are essentially unlimited. In a typical casino game the house edge is >50%. If you're turning $500 into $1M at a blackjack or craps table you're cheating.

Can't you go all-in 12 times to get there? It would only work for one out a few thousand people, but it's certainly possible.

uh find me one real life example of someone doing that and succeeding.

on a craps table there's no bet that has no house advantage other than the behind the line bet. Same with roulette.

and no, usually these tables have max bets, so it wouldn't be possible, if you had got to $500k (somehow), to bet that on a single bet.

again, the difference is the upside is asymmetric with options. also it's never an all or nothing bet like a coin flip - if your option value goes in the wrong direction you can sell for a partial loss.

12 second search: https://www.youtube.com/watch?v=kWok7813jZU

Splitting hairs over whether or not it's in a casino isn't really a requirement to being gambling, which is kind of the point.

I was responding to the hypothetical example of betting it all on flipping a coin 12 times to get from X to Y.

i'm not sure what your point is. this is a just a large 35x bet. turning $500 into $1M is 2000x. what casino game can you play that would get you there?

again, outside of essentially winning at a slot machine I don't know a game where you can turn $500 to $1M.

the insight here is that options buying is asymmetric. max loss for essentially unlimited gain if you bet in the right direction. there isn't a casino table gain that has the same quality.

i'm also not suggesting this is not speculative or not akin to gambling, but the risk/reward for options buying is better than a casino. it's also not an "all or nothing" bet. You can sell for partial losses without losing everything if it goes in the wrong direction, whereas table games are generally "all or nothing".

Gains are only unlimited with calls

there's a reason the sub is called /r/wallstreetbets I guess?

I guess they could also have lost an almost equally insane amount if things had gone south?

No... I wouldn't consider $500 in capital losses an "equally insane amount"...

I thought that you can only have such high leverage if you bought super meta products that expose risk, meaning you borrow money for that bet and which you‘d have to pay back if the hoped-for increase doesn’t come.

not with buying options - your max loss is just what you buy it for.

For example the $500 call options on TSLA which expire on Friday. They were on-sale all month, giving you the option to buy a share of TSLA at $500 up until this Friday.

Today they were selling for ~$85/share. But on Jan 1 they were selling for ~$5/share, and tomorrow morning it looks like they will be worth maybe $150/share.

30x in a month for a True Believer -- sure wish I had done it!

[1] - https://www.marketwatch.com/investing/stock/tsla/option/TSLA...

When buying call options the max loss is the purchase price. There's not a symmetric return as there is with owning stocks directly.

The reason you can make so much with so little capital is that the probability of the stock price moving above strike price of the call option is low assuming that the strike price is much higher than the current price and the expiration date is soon

Ah, thanks for the explanation!

They may be just about breaking even... WSB style

If you believe screenshots on /r/wallstreetbets and don't think they're all just photoshopping in fake gains once the stock went up.

Short dated deep out of the money TSLA calls are still gambling, but gambling you can do from home.

what's your point? the sub is literally called "wall street bets"...there's no confusion as to the nature of what everyone is doing.

you can write off up to $3K in capital losses a year. people who jokingly bought $420 and $690 strike options just a few weeks ago are literally up six and seven figures each.

Sure! But there are also folks who have lost hundreds of thousands of dollars. Survivorship bias.

OK...? I said nothing about the fact there are many more people who lost money or that this isn't akin to gambling.

But there are few investments outside of options that can turn a few hundred dollars into $1M in a matter of weeks.

wow, you werent kidding. some folks made out like bandits. what a rush.

how is that tracked?

how is what tracked?

theta will crush em

lol theta will not crush anyone who jokingly bought $420 and $690 options after last fall's earnings where the stock jumped to $320.

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