ehsync
Joined 7 years ago
Karma
33
Submissions
6
Member since
Feb 2
Founder @ https://omnieq.com
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Comment · 6 years ago
Launched my SaaS product [0] about two years ago and was able to quit my job last December to focus on it full time.
Threads like this were very motivating to me when I was getting started, and I encourage anyone looking for inspiration to read through HN's previous "side project" discussions! [1]
Comment · 6 years ago
This is tragic.
The consensus I've gathered is that this was a result of a stock option credit spread's short leg being assigned combined with a misunderstanding of the trading platform's reporting. If this is true, an analogy for the situation would be:
The individual bet on a coin flip, wagering $10 (representing the $700k) on heads and $9 (figurative amount representing the spread) on tails.
The outcome was tails.
The account immediately reflected the loss but not the win, displaying a -$10 balance.
When the $9 payout from the win would have settled, the account balance would have become -$1 instead of -$10.
The individual didn't realize the $9 payout was coming, and took his life in reaction to the -$10 balance.
Comment · 6 years ago
Depends on the strategy.
Buying out of the money options is a lottery ticket, where you pay a relatively small premium with the chance of a large payout if the underlying moves favorably or volatility increases. Your potential loss is limited to the premium you paid for the contract.
In the case of Boeing, you're not guaranteed to profit when owning puts even if the stock drops if time decay (theta) saps your premium at a rate faster than the change in underlying price relative to the strike of your option (delta), or if volatility decreased rapidly after the initial reaction to the news (vega).
Selling naked options allows you to collect the premium up front but exposes you to the risk of huge losses, in fact unlimited losses when selling calls.
Credit spread trading [0] also allows you to collect premium up front, but your risk is defined as you buy a cheaper option to hedge the naked position you created by selling the short option. The compromise is that your maximum profit is capped. This is akin to selling someone an insurance policy, with the stock as the underlying asset being insured. If you were bearish on Boeing and didn't expect it to rebound anytime soon, selling a call credit spread would be a good strategy to profit from your sentiment without taking on too much risk.
[0] https://omnieq.com (Disclaimer: This is my product)
Comment · 6 years ago
No longer a side project since I made the switch to work on it full time, but my stock option scanner SaaS [0] is profitable and my main source of income.