Let's take a look at RIOT.
Back to RIOT.
Exactly what I was going to say.
It's rallying as we speak.
New highs, new all time highs as we speak, as we speak.
So extremely interesting chart.
I kind of want to see if Bitcoin has made a new high off that as
well.
Looks like it has.
It is.
In Bitcoin [INAUDIBLE].
So they are still moving in lockstep,
and I think RIOT might be outpacing
just a little bit based on our previous chart that we had up.
This makes it a very difficult product to trade.
What do you think, Anthony?
I think it's important that when we say that the congruence is
out of whack, that it's not necessarily because of value.
We're just looking at relative pricing.
We're not saying anything is overbought or underbought,
oversold or undersold.
What we're kind of telling you guys
is that we're just purely looking
at the congruence between RIOT and Bitcoin
and how that's maybe the relative pricing of those.
So that's not-- we're not saying that one
is overpriced over the other because we don't know.
And I think that's the thing with RIOT,
and I would like to look more into how much Bitcoin
they hold.
Because-- and how much they mine and how the business really
works, because if you know how that business works maybe--
I don't know, and I don't know this-- maybe
they're just highly leveraged in Bitcoin
so that when Bitcoin goes up by a certain amount,
that one kind of goes up at an exponential amount because
of the different types of leverage.
And so, again, with something like this
in a trade like this, because we're probably
going to put on an example trade,
better know your product, better know what you're doing.
Yeah, and Anthony makes a great point.
These two products are linked, they are inextricably linked.
You can't-- that's definitely the case.
But I'm just kind of expanding on his thing,
this is a business, right?
This is-- we're talking about Bitcoin, which is a product,
and you're talking about a business which
is taking advantage of pricing that product.
Where do we see this all the time?
We see it in crude or a lot of different commodities, right?
Once you're taking that product, if the price of the product
goes up, chances are you might be making more money of revenue
because you're taking a percentage over that.
But what if your costs increase as price goes up?
What if you are leveraged in that product
so you only get a piece of every move up
or you could extend your piece, the amount
that you gain in a move up?
So you have to know the company as well as the product, right?
There's a lot of inputs.
This is an entity, RIOT, that has expenses,
that has people, that has human error, that
has all those kinds of things that you have to take
into account when trading.
You're no longer trading the product.
You're now trading the company that depends on that product,
and it's very important to make that distinction.
Yeah, I agree.
And stay risk defined.
Yeah, absolutely.
So OK, I mean this thing's blowing up as we speak.
We've got 250% implied volatility.
That's given us a 12.92 implied move in the next two days, OK?
That's almost a 20% move that we're looking at based on--
I mean we're seeing 22% today.
I don't see how that should be surprising.
But that's implying a 22% move.
The vol in this, as you'd expect,
we're looking at the 90, which I think is our top strike.
I've only got 80 strikes on here,
but I'm going to put 100 in there just to be sure.
80, 90 is our top strike.
We've got $1.90 bid in the top strike in the chain,
which obviously might move up soon.
But what are you seeing here, Anthony?
I'd like kind of a way to take advantage
of this implied volatility, but I don't know that--
my first one is iron condor, but I'll
bet the iron condor credits are going
to be minuscule because the vol is so
high all out through the wings.
What are you thinking?
Yeah, and I'm almost like looking,
like do we put something up for this week or not?
Look at-- I mean, look at the straddle for next week.
You know, I'm thinking like maybe go into that one
because we're getting so much more for it.
Yeah, we're going to have to bite our fingers
for a little longer.
But that's a really expensive straddle.
I mean, look at that.
That's what, let's see, the 70, we'll call it 75,
what, it's a $25 straddle, so you break evens if you sold it.
That's if you did.
Break even at 50 and at 100 on the top.
So I'm thinking maybe find some way out of the money options,
that maybe, like you said, a really wide iron
condor for next week.
Yeah.
I mean, that straddle--
here's how I think about it.
We're getting a $14 move today.
Let's say that that's a really big move
for what we're going to see over the next nine days
till expiration.
Let's cut it in half.
That's a $7 move.
Seven times, how many trading days
do we have in that time frame?
We have 7 times 7, that's $49.
If this is, I mean, that's a long way.
That is a long--
You know what the problem is too, Bill?
Is look at-- it only goes up to the 90 strike.
Exactly.
[INTERPOSING VOICES]
I might-- I wish-- this is where,
I mean that's what you're going to see all the time.
When you get a 25% move up, you can almost
guarantee that your topsides strikes won't
be ready and prepared, unless it's something like Boeing that
had those listed and it was trading $400 last year.
But I mean, this is something where,
if I'm thinking, trying to give myself
breathing room on an iron condor, something that's
moved $15 has a regular kind of MO at this point of moving 10,
20% in a day, I'm probably looking
to do something in an iron condor about 50% away.
And that puts us in the 100-110 area.
We just don't have that strike.
So what do we do?
Maybe a rate deal?
I was just thinking that.
We could do like two put spreads versus one call spread
kind of ratio.
It's going to have like a bullish--
it's going to have a bullish twang to it
because you're selling more put spreads,
but maybe you're just--
I'm thinking about selling less on the upside
because it's closer, and trying to capture
the premium on the downside so we can go farther away.
You know what I'm saying?
Yeah, I mean I like that idea, except for the fact
that I think all the momentum in this is to the upside.
Obviously.
So you think that we just won't get the premium
on the downside?
It's possible.
I think it is possible.
All right, well what do you--
I was thinking more-- well, before you
do that, I was thinking more like a 1
by 3 by 2 or something, like some sort of butterfly where
if it runs through it on the upside,
we're still making money, but if it
doesn't get all the way there or dies somewhere
in the middle of that spread we can still take it off
for a profit hopefully.
You know what I mean?
Yeah.
Well what if we did both?
What if we did an upside call spread
for around a small credit, or for a small debit,
and then funded with the downside put spread?
So you want to buy a call spread and then sell a put spread.
I want to buy a call ratio.
So this is going to be a pretty complex trade if we
do it, but buy a call ratio and then sell a put spread
to fund it.
So you, like a 2 to 1?
Like a 1 by 3 by 2 or something.
Oh, so like maybe, like selling a put vertical
to fund like a call tree, almost?
Yeah.
Yes.
Or like a call butterfly.
I don't know off balance, but a call butterfly.
Yeah.
No, I'm good with that.
Let's do one.
Let me try this, all right?
This is-- bear with me.
This is going to be a silly trade
to start out with because I'm just messing with the numbers.
But I've got the 175 and then--
shoot, I wanted to sell that.
175, sell the 185 three times, that's a $14 credit.
Then we go out to the--
how tight can I make this?
There's only $0.80 difference between the 90 and the 87.
This, well, from a midpoint factor that's kind of a lot.
Are you doing next week's or this week's, Bill?
Next week's?
I'm doing next week's.
This is $1.50 debit.
I kind of want to analyze this real quick to make
sure my mental math is working.
We're paying $1.50 for a $10 minus 2 of the 6,
so we'd still walk away with, what, $250?
$350, if we did this?
If it went over it?
What's a realistic price that we'd get?
What's the natural saying?
Sorry the screen's too small.
Does that say 4?
No.
Really?
It could be.
Yeah, 3.75
Yikes.
That's [INAUDIBLE].
Realistic price, let's see.
So if we got-- let's take a look at the spread.
I mean, if we're doing the whole thing at $0.65 debit--
excuse me $0.65 credit at 305 that puts our midpoint at 128
I mean, I think each one we'd have to pay past the midpoint
and we've got six different legs in this.
I mean, I think you'd probably have to pay $2 in real life,
$2.25 even to get filled in real life.
I would-- that's my guess, obviously.
I have no leg to stand on with that guess in real life,
because you won't know until you enter it, but--
Yeah.
So let everybody know.
Oh man.
[INTERPOSING VOICES]
MJ2Lite wants to look at pod stocks, which I kind of do too.
Yeah.
Let's, I mean so let's just do this.
And then we can fund it with a put spread.
What are you thinking on the put side, Anthony?
I'm going to put this in for a $2 debit.
I'm just doing one of these, by the way.
Yeah.
Yeah, I'm looking at credit spreads right now.
I mean, if you do one--
This is-- keep in mind, I'm Feb 26.
I'm a week out.
Yeah, me too.
Look at the Feb 55.50 put spread.
That's $1.30.
What did you end up paying for that?
I paid $2.
I assume I got filled at--
I got filled at $0.79.
I mean that's a paper money fill.
I think [INAUDIBLE] pay more than that.
We'd have to price adjust that one.
Man.
We're going to have to kind of come closer to the money
to get any decent--
I don't know, take a look at the 55.50.
The 55.50 I think is a nice-- it's a nice distance away.
That's like a 33% move away pretty much.
That's a lot to go.
That's more than one day, so you'd have--
even on a day like today it's more than one day,
so you'd have some time to react of starting to run into it.
You get $1.30, credit I think even you might get filled
in real life at even like $1.25 here on this thing.
I don't hate it.
It's a good amount of weight, you're getting almost a 4 to 1
there.
Yeah.
Good.
All right, you want to do multiple of these?
Maybe like three or four?
Thank you MJ2Lite, man, we can't get enough of you
every Wednesday, so.
Oh, yeah, much appreciated.
All right, well I'm going to take this down to $1.25
because I think that's a little bit more of a realistic feel.
And that might even be a little generous.
Oh, we got $1.27 in paper money.
Wow.
Just really swinging it out the park.
So I think this is a pretty interesting strategy,
and I want to go back and real quick
before we move on to pod stocks briefly,
this is the call tree that I built. Right, you paid--
oh, this has got the puts in there now too.
But I want to take these out.
So you paid you paid $1.50 for this.
This is going to get updated with the price
that we got, I mean, I think we got paid $0.79 on this.
So you've got your max loss at the bottom,
and then if it busts through all that,
you've got this long call spread with all this room for it
to be profitable.
Now what's tricky about these is if it runs up
to $86, $85 tomorrow, this is probably
going to show a loss on here.
This is a little bit of an expiration play
when you do these ratios.
Because you've got one that's all the way in the money
but then you're butting up against three of them
that you've lost a lot of money on now.
So you might even show a loss.
It's really more of an expiration
play than anything else.
And as you can see with the purple line,
it doesn't really move very much.
That's really something that's going
to be more affected by time than anything else
as I move the ticker forward here.
OK, well that's-- I mean that was just my little two piece
on that.
I think that's going to be interesting trade and something
to watch.
Hey everybody.
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