TLRY trade idea

[cuegis 683]

9 minutes ago, Djtux said:

I'm not an expert either. I'm just pointing out some risks that are higher than usual.

For LFIN option holders, there is the subreddit https://www.reddit.com/r/LongFinOptions

LFIN was a a crazy stock ipoed in dec 2017, talked about crypto&blockchain, was even included in the Russel 2000 index before being investigated and trading halted, and finaly delisted. I haven't read the whole thing, but long story short, some people tried to buy puts to enjoy the ride down and when the stock was halted for a long time, it wasn't always possible to close your position or exercice (because of the insane borrow rates), so i believe some lost the complete put premium because the option expired before the stock was trading again. So they were right with their put positions, but could not realize the gain.

I'm not sure how it applies to a put spread.

Well, even assuming "that" story happened here.....since you would be short puts, it would have worked to your advantage.

But, assuming that the actual market mechanism is working, by avoiding having any calls in your position, you have completely avoided the sort of risks that we have already seen here.

Now, assuming the market is working properly, by selling a put, you can actually evaluate what you general risks are.

Obviously when I see 350% ++ IV , my first reaction is...what is the lowest risk way that I can somehow sell that?

Oct $80 puts are $10 with the stock at $232.

That gives you a cost basis of $70 a share.

Assuming the market is functioning, you know what your risk is.

I don't think this stock is ready to go to $0.00...yet!

 

[Djtux 548]

Not sure if it's someone from SO. 10.15 looks like an entry price i saw someone posted.

I believe the 115 calls are now deep ITM and 30 translate to 3000 shares at 224 = $672000 short.

[NJ_KenRob 160]

Ugh. Filled Oct19 110/120 Call spread for 9.75

Still holding 100/110 put spread.

Sold the whole thing for 10.50, so I guess 925.00 at risk if this thing tanks...

[Djtux 548]

4 minutes ago, NJ_KenRob said:

Ugh. Filled Oct19 110/120 Call spread for 9.75

Still holding 100/110 put spread.

Sold the whole thing for 10.50, so I guess 925.00 at risk if this thing tanks...

Dropped today from 300 to 168.33 before being halted again.

[TrustyJules 3,212]

Nancy Reagan's words spring to mind": Just say NO (to the trade whether you have a toke or not is your business)

[NJ_KenRob 160]

Halted again...  5 times today I think.

[cuegis 683]

I guess the integrity of the marketplace really cannot be relied upon.

Once that is gone, all bets are off!

[Andrew 19]

6 minutes ago, NJ_KenRob said:

Halted again...  5 times today I think.

That is one crazy chart for the day.  You know some people made their retirement on that roller-coaster.  

[cuegis 683]

Exchange open. Back to $205.

But, that should change by $50  over the next 10 minutes!

[Kim 7,943]

1 minute ago, Andrew said:

That is one crazy chart for the day.  You know some people made their retirement on that roller-coaster.  

While others lost their retirement. To me trading this stock is no better than going to Vegas. 

[cuegis 683]

It's moving in $5 increments, with each tick, in immediate after hours trading....$190, $205, $195, $210 etc.

[TrustyJules 3,212]

1 minute ago, Kim said:

While others lost their retirement. To me trading this stock is no better than going to Vegas. 

As much as I dont care for Vegas - I would go to Vegas rather than trade this stock.

[Rogers 263]

14 hours ago, TrustyJules said:

As much as I dont care for Vegas - I would go to Vegas rather than trade this stock.

Yeah, at least there you get free drinks while they take your money..  

[cuegis 683]

There is a black and white difference between this stock and Vegas.

The only thing that can be learned from an experience at Vegas is that gambling in that environment is a losing proposition.

TLRY is the most valuable lesson of all.

For those that have followed the evolution of what has happened here, right from the start, there is an enormous amount of information to have been gained that will play an important role at some point in everyone's trading career, at some point along the line.

So many thing have been learned about not accepting things at face value, and the need to examine things further when they are not operating as they "should".

Lessons about short stock, and the cost of borrowing, and how high short stock borrowing rates can go.

The implications of short call exercise when there is no short stock available.

And on, and on......

 

Unfortunately, we had to learn about many of these things through following the experience of Clipsnation, who suffered greatly but really took the experience in the most brave way, and will come back from this saga a stronger, and much better trader in the long run.

I would argue that TLRY has been the most valuable stock (and options) to have observed to increase our own reservoir of knowledge about how markets can work in the most "unusual"  circumstances.

The biggest lesson to be learned is a very old one....."think long and hard before you act"

[Maji 203]

On 9/17/2018 at 10:49 AM, clipsnation183 said:

Again and good broker will help you through this as they are at risk also. 

I am glad that things did not get worse but I am sorry to hear about your losses too. 

On a lighter note, you were just too big to fail and TT helped you out. It is a lesson to all of us... stick to position sizing.

[againstallodds 15]

When Tilray IPOed in July, they sold small number of shares to public (as % of total shares). It has a very small float. Most of its shares outstanding are locked-up and held by insiders. Low float stocks have high borrowing costs. It is also one reason for the wild swings in its price and the vertical run-up before yesterday. Too many hands reaching for too little shares.

Charlotte's Web (CWEB on CSE), another cannabis company, recently IPO'ed with similar low float share structure. This hasn't uplisted on a major exchange yet and doesn't have options.

[cuegis 683]

Take this with a grain of salt because the person is questionable, as we know...

This is a Quote from Tom Sosnoff about the pot stock situation.....

 

It was part of an IB article about pot stocks.....

https://www.interactivebrokers.com/en/index.php?f=5599&vid=20501

 

"Tastyworks stopped allowing investors to open options positions on Tilray through its platform this week because it got so risky to trade the contracts, he says. The firm allowed investors to close out positions.

Still looking to bet on pot stocks? Sosnoff recommends playing Cronos Group options instead, as the stock has been turbulent but not as extreme as Tilray. Toronto-based Cronos produces and sells cannabis in Canada and Germany.

Sosnoff recommends selling “strangles” on the stock, which entails selling both a put and a call at the strike prices of $11 and $17.50, respectively. As of Thursday, the investor would collect $220 for selling the two options, expiring in about a month. The stock closed at $13.75 on Thursday.

It’s a wager that the stock will continue to gyrate but won’t cross below $8.80 or above $19.70, the break-even points, he says. The trade capitalizes on the high options premium investors can collect because of the recent volatility."

 

Edited September 25, 2018 by cuegis

[Andrew 19]

Selling a strangle on these stocks seems like you'll be playing Russian roulette.  Tom's penchant for naked shorts continues I guess.  

[cuegis 683]

10 minutes ago, Andrew said:

Selling a strangle on these stocks seems like you'll be playing Russian roulette.  Tom's penchant for naked shorts continues I guess.  

I agree.

I remember when he was showing one of his well researched backtests, that was created to make his point about how it is ok to sell "undefined" risk positions like short straddles, or strangles.

He looked back like 15 years and showed how you only got a 10% move once a year, or something along those lines.

His point was..."it might "technically" be an undefined risk position, but really, the odds of that happening are only once per year, so it's ok, and not as risky as they would have you believe...."

They happily sell strangles for .37.

So, I hope they are happy to make .22 cents,  10 times, and lose $14 once a year!

Edited September 26, 2018 by cuegis

[cuegis 683]

Just out of curiosity I looked at TLRY today.

It is around $135.

I remember when it was trading $220, on it's way up, and the Oct 19 80 puts were $10.

I think IV was 300+

Any trade involving this stock was a high risk situation.

But, I remember thinking, if you avoided any trade where there is a possibility of an assignment leaving you with short stock (i.e. short calls in your position), the least risky of all the very high risk trades, would probably have been to sell deep, deep OTM puts, like these.

I know it is hindsight but with short puts at least you know what you are dealing with , and the ramifications.

 

The only possibility of assignment would result in long stock, which is not the same type of problem as short stock.

With the $10 premium collected, your basis would have been $70, if you were assigned at $80, and the stock REALLY collapsed.