SteadyOptions is an options trading forum where you can find solutions from top options traders. Join Us!

We’ve all been there… researching options strategies and unable to find the answers we’re looking for. SteadyOptions has your solution.

If I Only Bought Netflix a Decade Ago


Here’s a fun thought experiment. Suppose you had $15,000 to invest evenly in fifteen different companies back before the Great Recession. Then you let it ride through the market’s downturn, holding your investment instead of selling anything. How much would you have today?

Here is the answer:

 

net.PNG


Financial website How Much, took a look at some popular stocks in 2007 to find out how much a $1,000 investment in each would be worth now. It estimates a $1,000 investment in Netflix in 2007 would be worth $51,966 as of October 31 of this year, or more than 50 times as much.

This is a fun exercise, and you might ask yourself: if I had $100,000 10 years ago and put them into NFLX stock, I would have over five million dollars today. 

However, this is hindsight. NFLX was pretty much a startup 10 years ago. Would you be comfortable to put a significant amount of money into one startup company? And hold it through all drawdowns (NFLX had plenty, some of them as high as 30-40%)? For each Netflix, there are hundreds of startups that went out of business. Is it really risk you are willing to take?

Here is an excellent argument from Ryan Vlastelica, MarketWatch reporter:

 

Quote

This was in the fall of 2007. I was fresh out of college and had just started at my first full-time job, and I had the idea to save up $5,000 and invest it. My stock of choice was Netflix Inc.

To my surprise, my dad strongly cautioned me against it, and convincingly enough that I took his advice and bought some very boring index funds instead.

My dad and I, we’re still close.

His argument had been simple: investing in single stocks is risky even if you’ve done your due diligence, so it’s better to diffuse that risk by investing in the broader market, which is almost guaranteed to go up over time (especially over my timeline of a then-21-year-old kickstarting a nest egg).

Ultimately it’s better to be talked out of a good investment than talked into a bad one, which means I view this missed opportunity as more of a “what if” scenario than a decision that put me on the path to ruin. And so, while I’m reluctant to admit this in print, where it can be easily pulled out at the next family reunion, it should be said: my dad was wrong, but he was also correct.

 
The investing insanity of trying to find the next Amazon has more to say about the same subject:

 

Quote

 

People waste way too much time looking for the next Amazon, but I get it, it’s part of what makes investing exciting. So if you’re going to search for a potentially life-changing investment, here are a few things to consider:
 

  • A lot of people spend their life looking for the next Amazon. Few people ever find it.
     
  • Sticking to a boring 60/40 portfolio is hard enough. Focus on getting the big things right.
     
  • If you can’t help yourself, limit yourself to a few speculative ideas a year. Two or three sounds about right.
     
  • Keep the amount you wager small. No more than 1% or 2% of your portfolio.
     
  • Earning 100% on a stock can be an emotional roller coaster. Earning 10,000% can lead to a lot of sleepless nights.
     
  • Let’s say you do find a unicorn; as the dollar amount you have invested grows, you become much more sensitive to drawdowns.
     
  • Just because you take big risks does not mean you’re entitled to big rewards.

 


Excellent advice. Please remember it next time you feel sorry for not investing in Netflix, Amazon or another hot name.

What Is SteadyOptions?

Full Trading Plan

Complete Portfolio Approach

Real-time trade sharing: entry, exit, and adjustments

Diversified Options Strategies

Exclusive Community Forum

Steady And Consistent Gains

High Quality Education

Risk Management, Portfolio Size

Performance based on real fills

Subscribe to SteadyOptions now and experience the full power of options trading!
Subscribe

Non-directional Options Strategies

10-15 trade Ideas Per Month

Targets 5-7% Monthly Net Return

Visit our Education Center

Recent Articles

Articles

  • SPX Options vs. SPY Options: Which Should I Trade?

    Trading options on the S&P 500 is a popular way to make money on the index. There are several ways traders use this index, but two of the most popular are to trade options on SPX or SPY. One key difference between the two is that SPX options are based on the index, while SPY options are based on an exchange-traded fund (ETF) that tracks the index.

    By Mark Wolfinger,

    • 0 comments
    • 427 views
  • Yes, We Are Playing Not to Lose!

    There are many trading quotes from different traders/investors, but this one is one of my favorites: “In trading/investing it's not about how much you make, but how much you don't lose" - Bernard Baruch. At SteadyOptions, this has been one of our major goals in the last 12 years.

    By Kim,

    • 0 comments
    • 869 views
  • The Impact of Implied Volatility (IV) on Popular Options Trades

    You’ll often read that a given option trade is either vega positive (meaning that IV rising will help it and IV falling will hurt it) or vega negative (meaning IV falling will help and IV rising will hurt).   However, in fact many popular options spreads can be either vega positive or vega negative depending where where the stock price is relative to the spread strikes.  

    By Yowster,

    • 0 comments
    • 768 views
  • Please Follow Me Inside The Insiders

    The greatest joy in investing in options is when you are right on direction. It’s really hard to beat any return that is based on a correct options bet on the direction of a stock, which is why we spend much of our time poring over charts, historical analysis, Elliot waves, RSI and what not.

    By TrustyJules,

    • 0 comments
    • 464 views
  • Trading Earnings With Ratio Spread

    A 1x2 ratio spread with call options is created by selling one lower-strike call and buying two higher-strike calls. This strategy can be established for either a net credit or for a net debit, depending on the time to expiration, the percentage distance between the strike prices and the level of volatility.

    By TrustyJules,

    • 0 comments
    • 1,470 views
  • SteadyOptions 2023 - Year In Review

    2023 marks our 12th year as a public trading service. We closed 192 winners out of 282 trades (68.1% winning ratio). Our model portfolio produced 112.2% compounded gain on the whole account based on 10% allocation per trade. We had only one losing month and one essentially breakeven in 2023. 

    By Kim,

    • 0 comments
    • 5,882 views
  • Call And Put Backspreads Options Strategies

    A backspread is very bullish or very bearish strategy used to trade direction; ie a trader is betting that a stock will move quickly in one direction. Call Backspreads are used for trading up moves; put backspreads for down moves.

    By Chris Young,

    • 0 comments
    • 9,478 views
  • Long Put Option Strategy

    A long put option strategy is the purchase of a put option in the expectation of the underlying stock falling. It is Delta negative, Vega positive and Theta negative strategy. A long put is a single-leg, risk-defined, bearish options strategy. Buying a put option is a levered alternative to selling shares of stock short.

    By Chris Young,

    • 0 comments
    • 11,128 views
  • Long Call Option Strategy

    A long call option strategy is the purchase of a call option in the expectation of the underlying stock rising. It is Delta positive, Vega positive and Theta negative strategy. A long call is a single-leg, risk-defined, bullish options strategy. Buying a call option is a levered alternative to buying shares of stock.

    By Chris Young,

    • 0 comments
    • 11,510 views
  • What Is Delta Hedging?

    Delta hedging is an investing strategy that combines the purchase or sale of an option as well as an offsetting transaction in the underlying asset to reduce the risk of a directional move in the price of the option. When a position is delta-neutral, it will not rise or fall in value when the value of the underlying asset stays within certain bounds. 

    By Kim,

    • 0 comments
    • 9,654 views

  Report Article

We want to hear from you!


There are no comments to display.



Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account. It's easy and free!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now

Options Trading Blogs