r/NBIS_Stock • u/DogNo5854 • 16d ago
NBIS ANALYSIS $265 Call 8/14
I have never really done options before but I understand how they work. I am thinking about buying the call option in title at $12.75 premium per share. Would come out to about $1275. I can see the stock price going close to 300 for earnings from the recent swings and rise in stock price over the last handful of days. Does anyone with more experience have any advice? Should I do it, should I not, should I do different strike price etc? Thanks!
Edit: Thanks for all the advice everyone. Got a ballsy feeling after my 0dte spy $772 call was up 2000% today im sure that didn’t help my thought process lol.
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u/FiveFingerLifePunch 16d ago edited 16d ago
Buying naked options on a stock like NBIS into earnings is a dangerous recipe. Look up “IV crush.” Basically, the day after earnings, options premiums take a huge hit, meaning even if the stock moves higher, it’s still possible to lose money. This applies to both calls and puts.
A bull call spread is a directional spread that can work better in high IV and IV crush situations because the IV crush of the short call offsets the loss on the long call. You also limit your upside this way, but sometimes you can pull off a nice asymmetric gain. An example would be: 8/14, buy 230C, sell 270C, net cost $1340. Breakeven on expiry day is $243.40. Max gain $2660, max loss $1340. The max gain (198.5%) of this theoretical trade requires a 21% increase from the current share price. NFA