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Options Contracts and Reddit

12 views | 28 Jan. 2021

With Reddit Community

With Reddit Community Wallstreetbets creating a controversy that has hit mainstream media many people are now talking about the stock market and investing as a whole. However, this controversy surrounded a unique investment vehicle in that of option contracts. So I created this quick video giving an overview on what option contracts actually are.

****I did misspeak when it comes to the profit of a put contract. The profit would be 200 dollars as they sold 4500 dollars worth of stocks at a price of 4700 dollars

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Did Reddit Just Save AMC? - Charts with Dan!

28 217 views | 1 Feb. 2021

Wall Street has been

Wall Street has been turned upside down by a band of Reddit investors - did they also bail out one of the biggest theater chains in the world? I break down what's been going on and if AMC is out of the woods, plus this week's top box office and streaming charts!

01:07 - Remembering Hollywood legends

04:20 - Box office charts

10:15 - Reddit and AMC

26:21 - Box office flashback

28:23 - Streaming charts

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UltimateKyuubiFox

It’s been almost a full year but hearing $4,800,000 at the box office described as a “not great, but not discouraging number” still makes my eyes crawl back inside of my head. That’s so little! That’s a bomb of the year! But no, that’s serviceable now... aaahhhhhhhh.

Thermal Ions

On AMC, I tend to disagree. Removal of a $600k bond debt from their balance sheet doesn't mean they have an additional $600k cash. Maybe there's a small cash saving if they have to service interest on the bond - it's by no means a get out of jail free card to comfortably take them through to the end of the year. As Dan acknowledges it definitely isn't a game changer to their larger problems.

Timothy Reynolds

????????? for the Frau Bleucher bit. You know, the horses scream because “bleucher” means “glue-maker” in German.

futuramayeah

Dan, i know that Toysrus closed because of something to do with somebody doing something with debt to the company, did that have to do with what you are talking about in this video with shorting?

John Bainbridge

Reddit: "Film projector go brrrrrrrrrrrr."

Matt Chapmond

Corey Ross: hero.

Jim Brown

I love that people think they broke the hedge funds. Those guys will be rich tomorrow and the day after tomorrow. Their clients take the brunt of the pain. Meanwhile capitalism is still alive and well.

Hamil Patel

First it was Sanders memes, now it's Stonks. Weird year.

Nic Dennis

Like given for properly placed horse sound.

Chad Campbell

Next week, call it "Deviled Slayer," followed by "Deviled Egg Slayer," etc. The ultimate running joke.

Chris F

A concept that drives much if this action -- the Short Squeeze

You borrow a million shares and sell them for $5/share. You have $5 mil. Now some people pile into the cheap stock and push it up to $7. You owe a million shares. If you get out you have to buy a million shares at $7. You lost $2 mil.

Here's the squeeze -- to get out you have to buy a million shares and that drives the price up. This is called a positive feedback loop. The thing is what causes more of the thing. It's like fighting the Hydra. The one thing that causes more Hydra heads is cutting off a hydra head.

Now it is up to $9. Two other people with million share short positions are squeezed. They can't afford to lose more so they are forced to get out. Both need to buy a million shares just to hold their loss down to $4mil each and now they are bidding against each other. They get out and the stock is now at $12mil. The next guy has lost $7mil and it's getting worse. He knows he's in a bad spot but the stock is bound to flucctuate. If it dips from $12 to $10 at least he loses $2mil less, so he waits.

Dan mentioned GameStop being over 100% shorted. Say a company has one billion shares in existence but has 120% short interest. That means there are contracts out there requiring people to buy a total of 1.2 billion shares. Sounds dangerous but they all expect to buy those 1.2 billions shares at $2 or $1 or pennies per share as the company collapses over time. (And part of the reason the company will fail is that their stock price has been driven even further down by people selling 1.2 billion borrowed shares to bet against the company)

When you buy a $4 share of stock you can lose no more than $4. But if you borrow a share and sell it for $4 with a promise to replace that share there is no theoretical limit on what you can lose That guy in the example who decided to wait until it went down to $10 watches in horror as the stock goes to $450 a share. He is now down $446 million on a transaction where his profit could never have exceeded $4 mil.

And a lot of that rise to $450 was driven by people being squeezed -- forced to bid against each other for shares just to get out of their predicament.

It is rare for shares of a company on the edge of bankruptcy to suddenly go up times a hundred so people with huge short positions in stricken companies feel safe but when short interest is more shares than even exist it is like a coiled spring. The moment the stock goes up much there will be a buying frenzy. And, as we saw, that effect is exploitable by people buying stock to try to force a squeeze.

Bottom line -- in the future people will be more reluctant to short stocks that already have a lot of short interest.

Simon Wakefield

The problem with this is everyone is holding the hedge funds up as evil billionaires who hurting them is a good thing and that it's helping the normal people but that's not the case. Most investment funds these days including things like peoples pension funds are heavily invested in Hedge funds as the return is high and consistent which means doing a massive amount of harm to normal people. Also, hedge funds pay a considerable amount of tax AND employ people and not just a high paid fund manager type people, lots of people in lower-paid roles. So this market manipulation (and yes its market manipulation) is damaging regular people.

And what makes it worse is that the people making bank are also not regular people, they are the people who could afford the risk to invest fairly big early on. They may not be billionaires but they aren't badly off. They have got in early enough that whatever happens, they will make massive gains BUT to make those massive gains it's required them to set up what is basically a pyramid scheme. It needs every person who invested to persuade others to do the same but each level you go down the pyramid the higher the price the shares cost to buy so the safety margin so they don't lose money gets smaller, this is especially important for those who are seeing what's going on and the gains and jumps on the bandwagon knowing nothing about the stock market. They aren't checking in real-time for the slightest hint of a downturn to trigger a sale, even if they were they wouldn't know the signs and there is a real risk of them losing everything as they won't react in time when it crashes back to the ground, for many people this is money they can't afford to lose. That's why the likes of Robinhood were right to stop trading, people were being sucked in by complete and utter pieces of sub-human scum using other people to take a risk knowing most will end up losing money while they make millions from the misfortune. All while also damaging people elsewhere by making things like their pension take a massive hit and for them to lose regular people jobs. Not to mention depriving the country of tax revenue some of which goes on services that really help the regular people.

Manipulating people to take financial risks is wrong even if you hate hedge funds shorting stocks and even if there is some justification for that hate. I hope Deepfuckingvalue and anyone else significantly involved end up rotting in a jail cell for the rest of their lives, it won't help the many people they end up financially screwing but at least its stops them enjoying the gains of their pyramid scheme

StarFyreXXX

Deepfuckingvalue's youtube channel is Roaring Kitty. For january, he's made $43 million on gamestop (he's sold about $13 million of it so still has $30 million in gamestop). He actually bought it years ago thinking it will go up due to change in management. he put in around $750K. and that went down to about 100K before all this happened. so he held and really believed and then he noted the shorting information (which is public). The one point i dont think you mentioned, incase there's someone who still doenst fully understand. every friday shorts come in to call, so they have to be paid back. BUT if no one is selling (which is why the reddit people keep telling everyone to HOLD!!), they cant buy any shares to cover. Instead, people are putting much higher prices on their shares to sell. So lets say instead of market price around $20, i'll ask $40, etc. so THEN they sell it, which drives the price up as the going rate keeps going up, thus screwing over other hedge ppl. ANd since its been shorted over 100% (which i was told is illegal but it can happen by accident due to companies almost like moving shorts around or something -this part i dont get) if everyone tried to call at the same time, they cant... hence the crazy price fluctuations, etc.

Mey

Thanks, that was a very clear and surprisingly optimistic explanation

Matty M

my head hurts

RiverNaiad

Thanks for adding the country flags!

roblinssen88

One key aspect you're not mentioning about the hedge funds betting on AMCs price going down is that they have stooges working in the media (and likely even politics) that help hedge funds push a stock price wherever they want it to. These stooges are easily recognisible during this Gamestop saga, as it's the hedge funds' stooges that push the narrative that AMC is folding, which in turn causes a panic with investors leading them to sell their stocks. Because it's important to keep your eyes open now: EVERY journalist defending hedge funds and attacking retail investors like the Redditors are enemies of your own wallet and are owned by the hedge funds to lie to you, to further push the hedge funds' interests. They prefer the billionaires of your regular investor. They help steal your investments and move Main Streets money to Wall Street.

You bet your butt with these specific hedge funds going in over 100% they were determined AMC was going bankrupt. They would have pushed that narrative, making it a selffulfilling prophecy in the end. And AMC appears to be saved for now. Just remember to keep your eyes open for the stooges and ignore their lies from now on, everyone.

Black Daria

It's always spooky when actor's die in three's

Darth Stewie

The drop of Master makes sense as it recently became available on Amazon Prime Video as a SVOD title in around 230 countries around the world.

B-dan

The Special Editions were my first exposure to Star Wars. My Step Dad didn't care about the changes he just really wanted me to experience Star Wars in theatres like he did. Such an amazing experience

AJxBISHOP

Loving the new studio

Eric Tortora Pato

Your reporting on the chinese new year's box office closure last year was my main canary in the coal mine for the pandemic, and why I started to warn people around me. You don't close the movies for your biggest holiday without a reason.

Drew Carleton

Dan explained (with Cory's help) the situation with GME and AMC better than 90% of the mainstream media could. Then he goes on to actually explain how this affects AMC itself, which is something I haven't seen ANYTHING on from headlines and major publications. This is amazing, thank you for putting this all together!

Neil McJannett

This is the third video I've watched talking about the Wall Street situation, but the first one that's actually helped me understand what's going on. Thanks Dan and Corey.

S Aziz

AMC invest guys going to rocket ?

Bloody Good June

The flags were a good idea, but you are operating under the presumption that Americans know foreign flags?
And thank you for the whinny after saying Fraü Blücher??

Tom Hahnl

Love the Flags on the International Chart, please keep it.

NOMO FOMO

Hal Holbrook passed away today as well. RIP

Almost Shawn

The game is always fair until you lose.

Christian Nönken

2:55 It's pronounced Frankensteen.

Wiu Wiu

Bought 35 shares at 16$...I have about 5k in my bank account so it’s not the worst but I have a bit of anxiety over it. I feel so tricked in to all this. Any tips on how to think now so I don’t feel down...?

Samantha Norton

If nothing else at least people are watching The Big Short which features one of the few realistic representations of an Autistic person in media.

Hubert Sigler

Thank you for another great video. This is perhaps the best explanation of the stock short situation I've found and speaks to your talents!

onequartercanadian

I love that you do all these streaming charts because it's fascinating when movie charts correlate to current events. Like Big Short and Wolf of Wall Street during these times, movies and shows about African Americans during increased BLM protests, when actors die or a franchise gets a new installment. I just find it super interesting and cool when you see current events reflected in the kinds of shows and movies people stream.

Kryptonite

movies have already been greenlit about r/wallstreetbets

Michael McChesney

We studied the stock market in my 11th grade social studies class. Since I saw Star Wars on the big screen in 1977, if you'd guess my teacher did not use the Big Short as an example of stock shorting, you would be right. Instead Mr. Miller referred us all to the climax of Trading Places. I suppose using that movie as an analogy the Dukes are the hedge funds and Reddit is Dan Ackroyd and Eddie Murphy. I am not sure who the gorilla is.

Will Schneider

Dan: "But, does it save the company?"
Also Dan: "That's an excellent question, Dan."

Suz Vera

Hedge funds aren't the only victims, when this all shakes out. Speculative trading is gambling - so, buying a couple shares one can afford to loose across thousands of retail traders to make a point is one thing. Any more than that, and it's troubling. Also, selling info on the retail trade traffic is how Robinhood makes money. Free isn't free.

Ben From the Bunker

Good info Dan. I like how you talked about the effect this has on AMC for now, but also prognosticated the future.

Boil Derrik

Flags are a neat addition

szewei1985

haha this feels like investing 101 class lesson????

arturo de la isla

Dan trying to pronounce Jenny Rivera: mariposa de barrio is the best way of ending this video xD

Kevin Adams

I remember having to take a class that included a section on investing. We did have to choose a stock to short. It felt weird being able to bet on a company's failure.

David Szaks

Ok something I dont understand about AMC. Yeah they don't owe 600 mil to SLP any more.... but SLP sold all their stocks. So that also means AMC doesn't have the 600 mil (or 713 mil really) that SLP loaned them anymore either right. Basically it seems SLP forced AMC to cash out the entire loan while they were a bit a head. In other words they don't have 600 mil dollar debt any more, but they also don't have 713 mil dollars in liquidity any more. Is that a good thing?

futuramayeah

you said they are dealing with rent? either they are a franchise like mcdonalds that rents the theaters to franchisees or they rent the land from property owners, to which i would ask, why don't you just buy the land the theaters are on?

Solo21fm

I have a tip (could be good, could be bad) when you show the top 5 for box office, your CHARTS logo is in the middle of the screen which makes it look like you are highlighting something in the the third movie spot. This week It looks like you are highlighting something about Wonder Woman. Maybe have it slightly offcenter so it is not below one movie and it will refrain from my eyes thinking it is being highlighted...

Fran Ohmsford

1. How do you "Borrow" Stocks/Shares in the first place?
2. HOW IS THIS {selling something you don't own} LEGAL!?
3. Sounds like Reddit are in the right here.

Rohan Sharma

You are one of a kind Dan, what great work and research ? ??

Ant Devamp

New spicy seasonal threats:
California Virus Covid 2 (B.1.1.7.), soon to a state near you!
Ebola Virus in South Carolina, seriously, we're doing this again?
Vaccines MAY works on them.
Stay tuned....

Kim Olson

Dan: Please don't leave.

I would never leave you!

MissOrsa

Trading Places has a great bit of Shorting

Derek Davie

Something people don't realize is that this isn't going to hurt the super wealthy in the long term. What this will hurt is small investors and pension funds.

Evil Jedi

Really good idea adding the flags. Props to whomever suggested it.

toddhollen

When I first saw people taking about the Gamestop thing I started thinking that I needed one of the youtubers I like to explain it to me. But then I ran through the list to find which would talk about it. SciShow? Nope. Legal Eagle? Nope. Lindsay Ellis? Nope. Um Mr. Sunday Movies? Lol no. Screen Junkies? Probably not. Dan? Probably not. :( I figured I would never understand it. But then I heard that AMC was involved and the was a bright light that now Dan could explain it to me!

Adam NishMa

if people on reddit invest - put money in, then where/how do they make a profit? the stock price rises but it does so because many people put their money in so isn't it like a total of that sum? where does the added profit come from?

Steven Puckitt

I invested $40 in AMC. I'll probably lose most of it, but that's a weekend to the movies. I don't mind losing it to save the cinemas.

seriliaykilel

Thank you for doing this Dan! I’ve seen so many others talking on this issue without doing the work of learning about it — you can tell you did the necessary research (including learning from patrons) to speak intelligently on the topic. Really great reporting!

dan jokess

In 10 years we could be looking at a sequel called, “The Small Short”

Michael Hannell

You should also include Vudu in your weekly buy/rent chart. That's were I buy and watch all my movies

Gabriel Leroux

To be honest, I’m still not sure what Reddit exactly is, but good for AMC ?

Brandon Vardy

commenting... because algorithms

Mythdusterds

I am glad you explained the AMC Stock. I was wondering what was meant. I had invested in 41 shares into AMC when the stock skyrocketed on Wednesday. I knew something was bizarre when it suddenly was up like crazy in a day.

Lisa S

Sticking with the movie theme. The real "Wolf of Wall Street" see it as illegal, for the one's that encourage the others to join in. Having said that, he don't think that the government will do anything about it (but they could if they wanted).

https://youtu.be/0E5Xt6n9zWI

Fran Ohmsford

Are you not using "The Numbers" anymore?
Because they still have Demon Slayer at 317mil and A Little Red Flower is at 208mil on their 2021 list :)

Katherine Gouwens

I want Stocks with Dan now as a series

Robbie Reyes

I’m so glad you added the horse sound effect lmao. Rip

PR Media

I really miss this show having a co-host.

By Kelwinkwel InkBlock Media

Hey Thanks for mentioning both major heavy weights in your show.

Kathy Murphy

Dan thanks for the horse neighing. I think she was the last cast member alive from Young Frankenstein ?

Chano Williams

Thank you so much for breaking this down! I hadn't been following this story closely, but I had a vague guess as to what was going on (or how it was going on). The Big Short is a nice reference point. Such a great film. Thanks again!

Phelie315

Got a lot of ads for brokerage apps with this video XD

Ryan Thun

Loved the young frankenstein bit

onequartercanadian

Also if you want another video on a wall street bets topic, Casey Aonso made a great video recently about it!

Rohan Sharma

I see a movie or a mini series coming on this news.

Shaun Vincent

19:00

After 6 years of working behind the scenes for a news network, for this graphic I personally would have either given each bulletpoint its own screen or if you want them all together like this I would have revealed or highlighted each point as it was brought up.

Love this channel!

TVandManga

I've been hoping for this explanation ever since I heard AMC was involved, thanks so much for this Dan!

Ben Close

Croods is just proof that Disney made a massive mistake in denying Soul a theatrical release.

Constance Lewis

Top notch episode as always. Well researched and such.. I love it when Dan says things like "Exodus is number seven, sure why not?"

Wayward Mind

Dan, would you mind boosting your final volume mix by about 25-30%? Regardless of which channel's videos I might have been watching before I jump to one of your videos, yours are always noticeably quiet by comparison. Regardless, another great video! Thanks

Jess_Marie_G

I think at this point, calling you just a "movie reviewer" is cutting you short.
You really are a researcher who happens to be enamored with movies. So happy to see you expand your creativity in your own channel!
Thanks for another great episode Dan and Mara!

Randy Stanley

What happens to all the little guys money if Gamestop really does go out if business, like it appears it eventually will?

AmethystBeloved

I've seen different outlets explaining this Wall Street short but it didn't click until now. Thanks for the PowerPoint slides, Dan! The visual aid really helped my comprehension.

MetaphorsBeWithYou

Loved the Wall St. research, still don't get it though eventhough I've watched many a videos related to it.

Patrick Damiani

Everyone at work is signing up for fidelity, vanguard, even RobinHood and investing in stocks for the first time in their life. Hopefully that’s a good thing! I don’t know, but my wife and I are one of them. Strange way to feel encouraged to join the stock market!

Jim Smith

Rumor has it, that AMC Theaters will be converted for live entertainment, they will be Lollapalooza style of entertainment company may be bought out by Live Nation or Jam Productions in a nationwide move for venues that require numerous amount of entertainment in one venue.
Mark Cuban may have foreseen the future in buying Live Nation stock.

First34

This video had a strange thumbnail, I almost missed it in my subscriptions. When you are not in the thumbnail, your logo should be bigger in my opinion.

Sirxup

Shout out to the ? hands. We love our movies! Thanks for video.

Edgar-Right

I don't want to be that guy, but it seems like there is a piece wrongly build on the back vandor of your lego VW Beetle. And also the roof is placed backwards.

Peter Parker

No they gave it a sarcastic comment

Cory Taylor

Darn! I wish I payed more attention to reddit.

onequartercanadian

Usual petition to get Dan to 100k subs before his channel's first anniversary!

meloD30

I appreciate the way the remembrance for people who have passed away is handled here.

Lingerr Senghor

The honest trailer commentary for Jurassic World is one of my favorite ever. Everyone check it out if you need more of a Murrell fix before next week :)

Theodore Roosevelt

hmmm

Rohan Sharma

This news makes me happy at the power of unity of people but also frustrated and angry, few control the lives of billions and not someone serving those people.

Gary Brunsvold

it will help keep the crooks honest-ish

meloD30

Okay, it's time to put together a pitch for 2022's The Big Hold.
Who will direct?
Who's in the cast?
I'm throwing in Deakins to DP, because I will ALWAYS throw in Deakins to DP.

Senpai

Dan in here with the clutch explaining to me wtf a short stock is when no one else could

David Szaks

Jury is still out on whether or not this is market manipulation. More so for some people than others. For example if you were on reddit posting something like "lets all buy stock to stick it to those rich hedge fund people" you might be in a bit of trouble.

Itsawrap1911

Dan...your volume is really low

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GUY IS UP BIG $$$ ON FIRST OPTION TRADE | Wallstreetbets | Robinhood option trading

40 722 views | 6 Feb. 2021

This video looks at a user

This video looks at a user on subreddit Wallstreetbets and how his option trade is swung way into the money profiting. He is trading on Robinhood options, making over 4,500% in one trade!

This video was produced by posts made on wall street bets. This channel goes over crazy options purchases every day so subscribe for more.

Wallstreetbets:

https://www.reddit.com/r/wallstreetbets/

This channel discusses stock purchases, options calls, options puts, buying options, buying calls, buying puts, wall street bets, r/wallstreetbets, WSB, robinhood app, gme short squeeze

#shorts #robinhood #optionstrading

Peter Oluwaseyi

How do I buy shares too please help a newbie

The Striper Show

Cool vid. Saying the date that they bought it would be nice

tremend_

Yall make it seem easy but question i got is does this have a high risk of losing money or low risk?

Thanos Kellark

But he had to have 60000 dollar to cover that contract correct

Chris Magallanes

That stock is this

piyush angelo

Hey man make videos on how you trade and how should we trade.
Love your content

Joe Martinez

Hi I got a question for you is that what they consider buying with option

Michael Yonko

Pls answer what platform I use, to buy and sale on thnx?

DWIGGING

Just bought 1000 shares of FUBO just saying this company is going to fucking soar ?

BLINK X ARMY FOREVER

Nice, you're getting better at the new vids now! Thanks for listening to our advice ❤

Chairman Kim

4500% is like putting down 1k and getting 45k in return
Worth

DLRS Nate

I don’t understand this contract and break even price techniques.

All I know is buy low sell high ,,, can someone explain what a contract is?

[wyatt]

I bought at $10c for 3/19 at $2.90 before BB shot up to $28. I managed to get a $2,000 gain but didn’t pull out as I got to greedy. But hey. You learn as you go and I’m only 18 and I’m smarter than I was last week. Better to learn how to have paper hands in cases like this

Gus Reed

Video on Senseonics?

V0lk Star

Yeah I remember I spend 36$ on spy and made 970$

Market Profits

That is some investment percentage wise!? bags

Bobby Kunkel

Bro where are you guys getting trade options on Robinhood.. their website says they don’t have it. And I can’t find any stocks with trade options on the app

OG_BREEZY1

40 to 1800 ? GG’s not bad ?

Luis O

On Robinhood, how does he cash out out of that call option if he doesn't have 100 shares of rdfn or the collateral for the shares?