Short naked call and unlimited loss in action

Discussion in 'Options' started by a529612, Sep 29, 2006.

  1. It's fake. No one would do that trade. And anyone who was capable of selling 100 RIMM calls naked would have to be pretty well off to begin with for the brokerage to let them sell naked calls, plus he would have to have 100k minimum in his account. No one with that kinda of money would do something like that unless they had tons of money elsewhere. And anyone who can build up that kinda of capital has to be somewhat intelligent and resourceful, or inherited it (in which case, they can go to rich grandpa and get more).
  2. Could be Rearden!

    Just kiddin, RM. :D
  3. Intelligence can be an obstacle to making mad money fast. It's quite possible that the person in question accumulated 100k by writing OTM options up to reg T limits. Many OTM option writers equate high probability with certainty and end up massively overleveraging all positions with eventually disastrous consequences.
  4. BCE


  5. but a guy who writes OTM based on high probability wouldn't then sell a very questionable call on a highly vol doesn't compute. My vote is the guy is an idiot
  6. People love overleveraging options. I bought those same calls yesterday, and they were going for .40. It wouldn't surprise me someone said, "I can make $40,000 if it doesn't go above $100!" How many times have we seen this exact same flawed "analysis" here on ET?

    Still, I think it's much more likely the post came from someone who bought the calls and now wants to celebrate by watching people rip on whomever sold him those calls.
  7. Perhaps, he was selling the 95 CALLs based on TA? Prior highs/all-time highs. It may have looked like a double top. People take these bets all the time: my CALLs are outside of resistance, it looks like it's going down, I have IV collapse in my favor, I've won this kind of bet 9 times already, it's a sure thing, I've made 100K doing just this kind of strategy, if I had been more agressive I would have made even more, this time I'll load the boat and really make some money!, what can go wrong? LOL

    I'm preaching to the converted here obviously. I agree he is an idiot.
  8. on a lighter note, RIMM was a nice short calendar candidate. Now only if i had picked the put calendar instead. :(
    #10     Sep 29, 2006