to keep is simple, as I don’t know just how much you know (and I’m still very new myself tbh)
it’s all purposefully complicated with obscure rules and exceptions, all specifically meant to trip up new “players”, breaking some in the wrong way can land you in prison, while a slight variation might be perfectly fine.
what helped me the most is understanding just how truly rigged the whole thing is, and what helped the most there was a book called Reminiscences of a Stock Operator, everything in it applies frighteningly well to modern day markets even though it was written over 100 years ago.
the biggest most important lesson is…look at everything like a scam designed specifically to extract as much $ from you as possible (which, is especially in low overall-trading volume levels like now, is 100% true. that’s fundamentally what bubbles are, people deliberately running the price of stocks up). it’s a zero-sum game, in order for you to gain someone else has to lose.
whether that’s bonds, stocks, futures, whatever.
but…there are 2 very fundamental rules that always reassert themselves eventually.
the true value of the underlying security, and if a company doesnt pay out a dividend…that means it’s stock is functionally worthless
the line MUST go up/down eventually
the more of a disconnect between those 2 things there is, the more someone who knows 1 can take advantage of someone who only thinks in terms 2.
and the best way to do that (for plebs atleast) is…exercising stock-options.
the US market, contrary to…literally every other market on earth, has this little rule that allows you to exercise options early.
so for example, say someone sells you a put option on SPY 3 years out, strike…780.
right now that’d cost about 12,500/contract to buy. if you bought that and SPY dropped under 655 anytime in the next 3 years…you could exercise it immediately for a profit.
right now spy is 658…a 3 point drop between now and 3 years out…that’s practically guaranteed. free $.
but when someone executes those contracts on you, if you don’t have the underlying, 1 of 2 things happens…you start paying your broker interest to borrow the underlying (at an ever increasing rate) or they forcibly close your position, which if your over-leveraged enough means…you get liquidated.
the issue is though, in a bubble, when everything is overvalued…how to do you safely play the casino without owning the underlying?
to keep is simple, as I don’t know just how much you know (and I’m still very new myself tbh)
it’s all purposefully complicated with obscure rules and exceptions, all specifically meant to trip up new “players”, breaking some in the wrong way can land you in prison, while a slight variation might be perfectly fine.
what helped me the most is understanding just how truly rigged the whole thing is, and what helped the most there was a book called Reminiscences of a Stock Operator, everything in it applies frighteningly well to modern day markets even though it was written over 100 years ago.
the biggest most important lesson is…look at everything like a scam designed specifically to extract as much $ from you as possible (which, is especially in low overall-trading volume levels like now, is 100% true. that’s fundamentally what bubbles are, people deliberately running the price of stocks up). it’s a zero-sum game, in order for you to gain someone else has to lose.
whether that’s bonds, stocks, futures, whatever.
but…there are 2 very fundamental rules that always reassert themselves eventually.
the true value of the underlying security, and if a company doesnt pay out a dividend…that means it’s stock is functionally worthless
the line MUST go up/down eventually
the more of a disconnect between those 2 things there is, the more someone who knows 1 can take advantage of someone who only thinks in terms 2.
and the best way to do that (for plebs atleast) is…exercising stock-options. the US market, contrary to…literally every other market on earth, has this little rule that allows you to exercise options early.
so for example, say someone sells you a put option on SPY 3 years out, strike…780. right now that’d cost about 12,500/contract to buy. if you bought that and SPY dropped under 655 anytime in the next 3 years…you could exercise it immediately for a profit.
right now spy is 658…a 3 point drop between now and 3 years out…that’s practically guaranteed. free $.
but when someone executes those contracts on you, if you don’t have the underlying, 1 of 2 things happens…you start paying your broker interest to borrow the underlying (at an ever increasing rate) or they forcibly close your position, which if your over-leveraged enough means…you get liquidated.
the issue is though, in a bubble, when everything is overvalued…how to do you safely play the casino without owning the underlying?