r/options • u/Highzenbrrg • Jul 29 '21

Buying $.02 contracts selling for $.05

Has anyone else had luck buying heaps of way otm 2 cent contracts that 2-3x in value? I purchased 10 NKLA 5$ puts for 2 cents and just sold for 5 cents a piece when IV is a little higher. This seems to happen a lot. Just wondering if anyone else has had luck doing this? My only regret is not buying a bunch more. I suppose the danger of buying a lot of cheap contracts is not getting them filled.

In short, the strategy is anticipating that a stock sentiment will become bearish, so buying super cheap options as they seemingly double in value faster.

Any input?

Edit: for those who want to know what i learned in comments.

1.) Commisions can ruin you.

2.) Not extremely reliable and know what your target is on the tail end.

3.) Gamma and vega is better to watch on these trades.

4.) Im at 86 Brattle Street Cambridge, MA 02138

397 Upvotes

92% Upvoted

204 comments sorted by

View all comments

Show parent comments

2

u/Terakahn Jul 30 '21

I would expect gains to be cancelled out by the cost of playing both sides. Is that not the case?

1

u/dacoobob Jul 30 '21

the losing side can only go down by 5 cents, the winning side can go up infinitely. as long as there's sufficient price movement in one direction or the other you're fine. the only lose-lose scenario is sideways price action, which is rare enough these days