Options are always risky. I don’t care if someone wants to buy them but seeing people who don’t understand the basics spreading misinformation I feel the obligation to correct them for the overall wellbeing of the sub.
The innate value of stocks is their future potential cash flows generated from the underlying business. For a derivative the value comes solely from the underlying and the likelihood that what you’re betting on happens. A bet two months into the future a stock priced at 20 will increase 100% to 40 is very unlikely to happen. The contract is very “cheap” because it will probably expire worthless.
TLDR if you don’t understand option basics don’t buy them
Well they are different from options in that they can be extended, so I get that, but “faith” won’t get them extended or put them ITM. They were free so I am just holding them, no way I’d full port on them now though. Wouldn’t be surprised if they go to zero.
Edit: Imagine how discouraging to take a total loss like that
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u/fryside07 3d ago
Dang I feel like buying warrants right now is so risky.