The last 6 months or so has seen some wild activity in the option market. When a trade is posted in the top-picks-room and shared on the private twitter feed, the underlying option sees a huge influx of volume causing the premiums to rocket on that strike with little or no move on the underlying stock - it is even worse with less liquid stocks. We get messages right away asking if they should still follow the trade even though the trade is now up 50% or even 100%+. The instant the price on the option moves the risk/reward is different, especially on weekly strikes. It certainly gives us pause now when posting a trade as some out there may blindly follow and hit the ask well above the posted entry price and see a loss even if the stock moves higher. We are not registered investment advisors so cannot tell folks what to do, but at the same time still want to be able to share some high risk trade ideas. With this in mind we are creating a new 'speculative trade' channel in the chatroom and will be creating a new twitter handle for it in the next week or so for it(stay tuned for details).
The expectations for the new channel:
- High risk option trades with short expiration periods(less than a week till expiry)
- Typically will let run to zero... stops can be difficult on weekly options
- May include small-caps names with low liquidity making it tough for entries and exits
- Looking for big multi-baggers but at the same time expect all trades to be losers
Think this new channel will allow for more trade ideas, which I think many are here for to begin with. Would love any feedback on this and will have another update in the coming days on the new Twitter handle.