r/wallstreetbets • u/DegenOptionGuy 💎Diamond Testicles💎 • 1d ago

Gain 27k -> $765k BABA $125p 4/4

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3.0k Upvotes

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577

u/Prestigious_Slip_958 1d ago

Seeing the contracts getting filled is so satisfying.👌

282

u/DegenOptionGuy 💎Diamond Testicles💎 1d ago

Made sure to include the price update and the sell for the boys

39

u/da_crackler 21h ago

I feel like you got lucky with the fill

163

u/DegenOptionGuy 💎Diamond Testicles💎 21h ago

It actually topped out at like 11-12 I left like 250k on the table

58

u/da_crackler 20h ago

You beautiful bastard.

17

u/Anal_Recidivist 20h ago

I’ve been working up the knowledge on this stuff and understand the concept of calls/puts, how the calculation works, etc.

But when you sold your puts, who bought them? Investors/funds or sold back to market like any stock?

245

u/DegenOptionGuy 💎Diamond Testicles💎 20h ago

Who cares?

3

u/Anal_Recidivist 16h ago

So another party physically had to buy these?

You couldn’t just sell them like a normal stock if they hadn’t bought them?

3

u/Codicus1212 898C - 0S - 4 years - 1/6 13h ago

There are open bids on hold with brokerages. The broker matches the seller with the buyer. The black scholes model is used to price contracts, but sellers can offer and buyers can bid for whatever price they want. On crazy volatile days like today (when the VIX skyrockets) these options have crazy high IV “Implied Volatility” that skyrockets the price of an option based upon the implied (think possible) move the stock could make.

Unless you’re selling thousands of options in something people don’t trade much, or if you’re price is too aligned with market consensus, you’re not going to experience any problems selling. Someone somewhere is going to buy them.

3

u/balls2hairy 11h ago

"normal stocks" are being bought by "the market". Market makers are there for liquidity if need be but you could be selling your 2 shares of Walmart to Warren Buffett or your neighborhood pedo. Doesn't matter so long as it gets filled.

42

u/YouHaveFunWithThat 20h ago

Just guessing but based off the price of the stock when OP placed their limit order, the shares dipped low enough for the intrinsic value of the puts to be higher than OPs sell order. I’d imagine there are algos designed to snap those up, immediately exercise them and resell the shares for a profit. It’s free money if you have the capital to exercise the contracts and the software to execute the trades fast enough.

-4

u/Temporary_Pay5262 19h ago

and to whom are they selling?

13

u/YouHaveFunWithThat 19h ago

I accidentally described exercising calls but they’re just sold on the open market. Puts are basically the same though except backwards. A 125 put gives the buyer the right to sell 100 shares at 125 each. With OP selling them at 8.50 each the puts effectively give the buyer the ability to sell shares of Alibaba for 116.50 each. If the price of BABA goes below 116.50 while OP still has their limit order for 8.50 open, anyone could buy shares at market price, then buy the contracts and exercise them for a small, but guaranteed profit. All they need is enough capital and/or margin to buy 100 shares per contract.

5

u/Anal_Recidivist 16h ago

Brother thank you, this made so much sense. I get “it” now.

8

u/DillonMeSoftly 16h ago

To put it simply, if you're asking who's getting boned here, it's the people who initially "gave birth" to those options for the initial premium. They started a contract and just like the non stock version of a contract, they have to adhere to them. Sometimes the win, but this time they got utterly fucked

1

u/soulstaz 15h ago

Honestly I don't get why anyone really sell the original contract options the risk seem insane.

Make 27k from the original price and then you have to pay up 750k$ in contract value to buy those shares.

2

u/ThreeEyedAngel 13h ago

If it’s a market maker that’s selling them, they hedge. They’ll short the stock if they sell puts and go long the stock if they sell calls

4

u/stuntswagmaster69 17h ago

Nobody "buys" them. The market maker takes the opposite side of your trade while staying neutral in the market. The market makers provide liquidity. Cmon dudes how do we not know this?

4

u/niceee_guyyy 17h ago

Market makers. The algo computer take whatever the inverse/opposite of your position is. Options are generally transacted between MM and retail

1

u/Aristothang 14h ago

It's mostly algorithms. One of the jobs of market makers is to provide liquidity like this. If you've noticed, most contracts will be bought/sold if you change your the bid/ask enough. There are algos always scoping the orders looking for a contract below market value. That's why some of your orders in obscure names/volumes instafill.

1

u/isospeedrix 13h ago

Yes, just like any stock.

1

u/bundmeinagg 13h ago

market makers

1

u/R12Labs 18h ago

You could have been a millionaire.

1

u/Shot_King_1936 18h ago

How long did it take till it hit the 11-12?

1

u/GrouchyAerie465 20h ago

What's the likelihood of not getting fill?

6

u/da_crackler 20h ago

Have you ever used Robinhood before?

1

u/GrouchyAerie465 20h ago

Nope, it's a genuine question.

9

u/da_crackler 20h ago

Measure your blood pressure now, then try using Robinhood, then measure your blood pressure again.

Serious, RH will gas light the shit out of you on your orders. Sometimes you gotta go below the bid. Not always but enough to make want to consider going long on $ROPE

2

u/GrouchyAerie465 20h ago

Good thing it's not available in my country then.

4

u/da_crackler 19h ago

Get a vpn. It'll help build character

2

u/stuntswagmaster69 17h ago

It's the bid ask spread.... you can always get filled at the bid. That's what the market makers are there for. As long as the option has intrinsic/extrinsic value - you will be filled.

1

u/chubby464 20h ago

Ok what are you trading next so I can either lose or win

1

u/LooseAbalone8950 19h ago

💦💦💦🍆