Wed Sept 13, 2023

Lucas Sommer woke up around the time the stock market opened and, still bleary-eyed, opened his

app. 

Not long ago, options trading was seen as best left to professionals with access to sophisticated trading tools and data. Now, a new generation of rookie speculators have been trying to strike it big betting on short-term options.

Shorter-dated options, expiring in five or fewer days, accounted for about half of all options-market activity as of August, according data provider SpotGamma, up from around one-third three years ago. Individual investors made up 27% of all activity in options as of June, up from 23% at the start of 2020, according to Bloomberg Intelligence. For popular one-day options tied to the broad S&P 500 index, individual investors made up around one-third of all trades, according to exchange-operator

. 

A study by finance experts at the London Business School estimated that most individual options traders lose money. Between November 2019 and June 2021, such investors notched losses of some $2.1 billion, with the hits concentrated in shorter-dated trades, the study concluded.

“We should stop pretending that’s what’s going on is investing,” said Benjamin Edwards, a professor at the University of Nevada in Las Vegas who has studied securities law. “It’s just gambling.”

Investment professionals have been closely tracking the activity of the rookie traders. Some pros say that wild options activity at the start of the pandemic contributed to mammoth one-day stock moves. Many also pointed to soaring options activity as a driver of the sharp swings in recent years in the shares of carmaker

and meme stocks such as

and

.

“It’s a really big revolution for the market in the U.S.,” said Julien Stouff, founder of Geneva-based investment firm Stouff Capital, who regularly trades the options. “At one point, it will be dangerous.” The boom in trading, he said, has helped suppress stock-market volatility at times this year, but also could make any turbulence worse, leading to a deeper market swoon. 

Chicago-based Cboe, the largest options exchange, has said such concerns are overblown, and that trading activity in S&P 500 options isn’t affecting the broader markets. 

Gains in the stock market this year have fueled interest among individual investors in options, which can enable them to make short-term, high-return bets on stocks continuing to climb. Stock-price movements can cause options values to rise or fall much faster than the values of the stocks themselves. Trades that expire the same day can offer the fattest rewards—and carry the biggest risks.

Shorter-dated options bets have become so popular they have their own nickname, 0DTE, shorthand for zero days to expiration. Already this year, there have been tens of thousands of mentions of the hashtag #0DTE across Twitter, YouTube and Instagram, and a litany of online communities on Reddit, according to analytics company Hootsuite. A few years ago, there were hardly any such mentions. 

Overall options activity has smashed records in each of the past three years. About 44 million options contracts have changed hands each day so far this year, on average, an 8% bump from last year and more than double the figure in 2018, according to figures from Options Clearing Corp. 

The activity got especially heated in 2022, when one-day contracts tied to the S&P 500 and Nasdaq-100 indexes took off. Traders have spent more than $1 trillion on options bets tied to the S&P 500 this year, according to Cboe. This year, around 40% of all activity expired the same day. 

Kyle Klett, 31, said he has made some painful trades over the past two years, including a string of mistimed one-day options that cost him tens of thousands of dollars. Still, he said, the big wins have enticed him to keep trading. 

In late June, during a stint in Las Vegas playing in the World Series of Poker, Klett said, he scooped up more than 300 contracts that would pay off if the S&P 500 index rallied by the next day. After he spent a sleepless night checking the futures market for clues on what would happen in the morning, he said, the S&P 500 rose 1.2% and he made $71,000.

He celebrated the big win—and his birthday—by playing roulette and slot machines while hopping from casino to casino on the Las Vegas Strip. “I lost $25,000 in poker but smoked the market,” he said. 

Klett said he places around eight options trades a day, and typically doesn’t hold them for more than seconds or minutes. He has ramped up his activity since losing his job earlier this year, he said, and hopes to make enough trading to buy a million-dollar home.  

He said he has clawed back his prior losses and has made more than $100,000 on his one-day options trading. “I’m just exceptionally great at it,” he said.

Wall Street firms profit on such trading. So-called bid-ask spreads—the difference between buy and sell prices in the open market—are much wider for options than for stocks. Professional trading firms such as Citadel Securities and Susquehanna International Group that buy and sell such options to investors pocket some of that difference.

At times, options volumes surpass activity in the stocks themselves. Brokerages made more than $2 billion from selling options orders last year, more than double what they made from stock orders, according to Bloomberg Intelligence data.

Sommer, the Oregon entrepreneur, said he has been trading options regularly since 2018. He has experienced exhilarating highs and painful losses, he said, and has had more than one conversation with his wife about big money-losing trades. 

“I’ve been addicted to this options stuff for quite some time,” he said. “You get hooked.”

He does most of his options trading on Robinhood, in what he considers his “gambling account,” he said. “You now have the power to gamble in your pocket,” he said, comparing the market to a casino. His long-term investments are with another brokerage. 

He estimated that he lost thousands in the Robinhood account in 2022 and is roughly even this year. In December, he said, the account dropped from about $8,000 to zero because of some ill-timed trades. He had bet that the stock market’s nascent rebound would falter, but stocks kept rising. 

Before that, he bet big on mortgage company Rocket, buying bullish call options tied to the stock day after day in an effort to turn thousands of dollars into a million. He made about $12,000, only to quickly lose most of it. He poured even more money into shorter-dated options tied to the Nasdaq in an effort to recoup the money. Instead, he lost it all. 

“You hit black, double down, black, double down, black, double down,” Sommer said. Then, “red, you’re at zero.” 

The losses pushed him to alter his strategy, taking a more calculated approach and often using options to protect his stock positions rather than to just roll the dice. Now, he regularly shares his lessons, wins and losses with a group of other investors on the gaming platform Discord. “If you get it right, the upside is unlimited,” he said. 

Write to Gunjan Banerji at gunjan.banerji@wsj.com

Monday Sept 11, 2023

Lots of bands and groups break up going back to the Everly Brothers, Beatles, Eagles, Simon and Garfunkel and the list goes on, Captain and Tenile, married broke up and got back together,six years seems to be about the limit for groups and that is also about the extreme for a tv show, amazing if it lasts that long.

Ozzie and Harriet where we met their kids and watched them grow up lasted during the boom bull stock market years of  13952 – 1966, a  perfect socinomic moment.

The Adventures of Ozzie and Harriet is an American television sitcom that aired on ABC from October 3, 1952, to April 23, 1966, and starred the real-life Nelson family. After a long run on radio, the show was brought to television, where it continued its success, initially running simultaneously on radio and TV. In terms of seasons, it was the longest running live-action sitcom in U.S. television history until It's Always Sunny in Philadelphia surpassed it on December 1, 2021 (though it still retains the record in terms of total episodes produced: 435).^[1] The series starred the entertainment duo of Ozzie Nelson and his wife, singer Harriet Nelson, and their sons, David and Ricky. Don DeFore had a recurring role as the Nelsons' neighbor "Thorny"

Taylor Swift  is doing New Eras and as I said at least  she cannot break up with herself but back in  1962 another idol Rick Nelson recorded this song, I checked he did not write it, but it reflects the  Vacation Movie theme if this is Paris it must be Tuesday

"Teenage Idol"

_________________

 

I noticed the line I need some one to be my baby which reminded me of a Beatles song written by Sun Records own Carl Perkins

50 women knockin on my door is what ruined the marriage of Desi and Luci, sad but true

amazing how all this is connected, eh?

Here is Carl Perkins playing with yes Ringo Starr and George Hariison in the great showtime special from  1985 and yes I have the dvd

https://www.youtube.com/watch?v=b1VD2Lcx5xA

The million dollar quartet at Sun Records included

Carl Perkins

Elvis Pressley

Jerry Lee Lewis

Johny Cash

Look it up!

 

"Everybody's Trying To Be My Baby"
(originally by Carl Perkins)

Weekend Sept 10 2023

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