The 5.00 strike options do not necessarily imply a move to zero in the stock, they also serve as a low cost hedge for traders selling premium at higher strikes . Also, the bottom leg frees up margin under RegT (retail) and JBO (market maker) rules.
Trade Preview: 5 point move down in very near term pushes this option up 88% to 0.32 if implied volatility remains constant. This is much higher leverage than nearby strikes and expirations.
The 5.00 strike options do not necessarily imply a move to zero in the stock, they also serve as a low cost hedge for traders selling premium at higher strikes . Also, the bottom leg frees up margin under RegT (retail) and JBO (market maker) rules.
BTO COIN 5 strike Puts exp Sept 15 2023 1x0.15, 4x0.18
exch EDGX
Trade Preview: 5 point move down in very near term pushes this option up 88% to 0.32 if implied volatility remains constant. This is much higher leverage than nearby strikes and expirations.
Out of my COIN call at $7 for a ~7% gain. If I knew COIN was going to tank today, I would have set a higher price on my limit order last night.
Hey David, correct me if I am wrong. This trade alert will cost $655 for one contract, am I right?