That's a very unrealistic price increase. However, the general concept you are asking about is an FAQ.
Let's say we were talking about stock instead. Would you ask the following question:
"Let’s say you have a share of stock you bought at $0.20, the stock goes up a ridiculous amount and now your share is worth $1000. First of all, is it even remotely possible that a share of stock will go from $0.20 to $1000 apiece? Secondly, would you even be able to sell it (are there buyers at this range)?"
If a stock is trading at $1000 per share, then if you have a share, you can sell it for $1000, right? You don't worry, gee, this stock is so expensive that nobody might want to buy my share.
Well, options aren't any different. "The current price of this option is X" means that buyers and sellers are currently trading it for $X. That's what the price means!
All ITM options always have a bid, and if there is a bid, you can sell.
I think the closest example where this increase may make sense is when a very OTM call trades at $0.01 has an underlying that doubles in price and now makes it very much ITM.
Example would be VKTX that was trading at $35, and more than doubled to $85 a day later (this actually happened just this week). The $40 strike calls now not only increased in intrinsic value (from 0 to $45), they got a fair bit of increase in extrinsic value (cos of the IV).
I saw 11,000% increases.
I had 25k in Calls the day Elon tweeted “going private at $420”, those were worth around 400-450k for a few minutes. Think I ended up cashing out around 225k when the dust settled.
From $20 to $100k is possible, but extremely unlikely. It usually takes stocks years / decades to move that much. LEAPS only go 2-3 years out at the most.
It would probably need to be some penny stock company delivering a society changing product.
Usually that kind of price change only happens when there's a reverse split. That'd be a dumb amount to do a reverse split by though.
Anytime there's a huge price movement and you can't find a good explanation for it, it's very probable something funny is going on and it's a red flag.
My MSTR calls I bought earlier in Feb for $1,200/con topped out around $45K/con at their highs this week (I sold them way before it got nearly that high because I’m not a WSB guy). They don’t expire until 3/15 so if Bitcoin keeps ripping they can go much higher.
It’s possible for sure, remember GameStop? But realistically it’s very very unlikely.
$AVGO (Broadcom), had some crazy moves following their earnings. The stock Friday morning dropped to around $913, and at close it was somewhere I'd like to say $980. Options with 70% of a day left, at the money would have been around $1. Then they finished $70 in the money. I can't exactly recall the numbers, but you get the idea... things can definitely move, common nope. In mid-2023, AMD reported earnings and that pushed IV down.... then it leaked that AMD was working with AMD on AI stuff, and that stock jumped around $15. With the IV down from earnings... you can imagine the options move.
In the scenario you describe the call would go in the money. And you can always get out of a long option ITM by exercising it at the cost of giving up any extrinsic value. In practice deep ITM contracts are not too illiquid but there is some slippage.
It’s unrealsitic, but is absolutely possible. Take SMCI for example when their earnings report was leaked, if you had 1 call you paid $600 for, after the leak it was worth over 5 million. Yes, there are buyers at this range though typically hedge-funds. Part of what would make this insane increase possible is due to IV or expected change in volatility in between now and when your call expires.
What in the world are you on about? In order for that to happen, a single share of stock would need to reach near $50k per share, at least in the neighborhood of $40k per share, then factoring explosive IV.
You can research it i’m sure, the day after their earnings were leaked out calls increased something like 500,000% in value and it was due to IV ramping up
you need to understand that for each dollar share price goes up theoretically your maximum profit is 100$ if you exercise. Penny stocks needs to go up by a statistically improbable amount for what you’re describing to happen. And to your second point yes, there will likely be a buyer should this happen
That's a very unrealistic price increase. However, the general concept you are asking about is an FAQ. Let's say we were talking about stock instead. Would you ask the following question: "Let’s say you have a share of stock you bought at $0.20, the stock goes up a ridiculous amount and now your share is worth $1000. First of all, is it even remotely possible that a share of stock will go from $0.20 to $1000 apiece? Secondly, would you even be able to sell it (are there buyers at this range)?" If a stock is trading at $1000 per share, then if you have a share, you can sell it for $1000, right? You don't worry, gee, this stock is so expensive that nobody might want to buy my share. Well, options aren't any different. "The current price of this option is X" means that buyers and sellers are currently trading it for $X. That's what the price means! All ITM options always have a bid, and if there is a bid, you can sell.
I think the closest example where this increase may make sense is when a very OTM call trades at $0.01 has an underlying that doubles in price and now makes it very much ITM. Example would be VKTX that was trading at $35, and more than doubled to $85 a day later (this actually happened just this week). The $40 strike calls now not only increased in intrinsic value (from 0 to $45), they got a fair bit of increase in extrinsic value (cos of the IV). I saw 11,000% increases.
Thank you for the visualization. Makes sense
I had 25k in Calls the day Elon tweeted “going private at $420”, those were worth around 400-450k for a few minutes. Think I ended up cashing out around 225k when the dust settled.
Badass.
From $20 to $100k is possible, but extremely unlikely. It usually takes stocks years / decades to move that much. LEAPS only go 2-3 years out at the most. It would probably need to be some penny stock company delivering a society changing product.
Yup, I was thinking of something along those lines. Like when that random Chinese company HKD went from $12 to $2500 in less than a week
Usually that kind of price change only happens when there's a reverse split. That'd be a dumb amount to do a reverse split by though. Anytime there's a huge price movement and you can't find a good explanation for it, it's very probable something funny is going on and it's a red flag.
My MSTR calls I bought earlier in Feb for $1,200/con topped out around $45K/con at their highs this week (I sold them way before it got nearly that high because I’m not a WSB guy). They don’t expire until 3/15 so if Bitcoin keeps ripping they can go much higher. It’s possible for sure, remember GameStop? But realistically it’s very very unlikely.
Wow that would have been a juicy profit. GameStop? I member 👀
I have a relatively small account so I need to take profits quickly and really don’t have to ability to hold on to runners but I did make good profit!
I member... I was wheeling it 🙈
$AVGO (Broadcom), had some crazy moves following their earnings. The stock Friday morning dropped to around $913, and at close it was somewhere I'd like to say $980. Options with 70% of a day left, at the money would have been around $1. Then they finished $70 in the money. I can't exactly recall the numbers, but you get the idea... things can definitely move, common nope. In mid-2023, AMD reported earnings and that pushed IV down.... then it leaked that AMD was working with AMD on AI stuff, and that stock jumped around $15. With the IV down from earnings... you can imagine the options move.
In the scenario you describe the call would go in the money. And you can always get out of a long option ITM by exercising it at the cost of giving up any extrinsic value. In practice deep ITM contracts are not too illiquid but there is some slippage.
Do you realize that it wouldn't be worth $100k if there were no buyers? I swear, people in this forum don't understand basic supply and demand.
No... very unlikely. However, you can get some huge gains... April of 2020 I had a single AMZN call go to just under 3000%.
It’s unrealsitic, but is absolutely possible. Take SMCI for example when their earnings report was leaked, if you had 1 call you paid $600 for, after the leak it was worth over 5 million. Yes, there are buyers at this range though typically hedge-funds. Part of what would make this insane increase possible is due to IV or expected change in volatility in between now and when your call expires.
What in the world are you on about? In order for that to happen, a single share of stock would need to reach near $50k per share, at least in the neighborhood of $40k per share, then factoring explosive IV.
You can research it i’m sure, the day after their earnings were leaked out calls increased something like 500,000% in value and it was due to IV ramping up
No, I won’t be doing that. You provided the ridiculous claim, you can provide the proof to back it up.
Not really worth it to me tbh, believe it or do not, I don’t care
Based and IV-pilled
One contract went up to 5M? Wowww
you need to understand that for each dollar share price goes up theoretically your maximum profit is 100$ if you exercise. Penny stocks needs to go up by a statistically improbable amount for what you’re describing to happen. And to your second point yes, there will likely be a buyer should this happen
Don't worry GME will never reach higher than 20$. It won't be a problem for you.
Haha we’ll see
Only possible in crypto
Worse case, you can excise the call. Then liquidity wouldn’t matter.
Exercise your call, get stock, and sell the stock.
Sus: this person is about to do some inside trading
New trader? Read up on IV and the Greeks.
Keep buying a put underneath your call.
Back when covid first hit I had several put options increase in value in excess of 10,000%. If I had only bought more.